Sotheby’s Investors Sue to Block $2.7 Billion BidFair Offer
Investors filed lawsuits this week in federal court in Manhattan claiming incomplete and misleading disclosures about the deal.
(Bloomberg) -- Two Sotheby’s shareholders are asking a New York judge to block the planned $2.7 billion purchase of the auction house by French telecom titan and art collector Patrick Drahi’s BidFair USA.
The investors filed lawsuits this week in federal court in Manhattan claiming incomplete and misleading disclosures about the deal. They’re seeking to block the companies from going forward with the transaction at least until there are further disclosures, and they’ve asked for unspecified damages.
On June 16, Drahi agreed to buy the 275-year-old firm, ending Sotheby’s three decades as a public company. Under the deal, investors will receive $57 in cash per share, a 61% premium to the closing price on June 14. Sotheby’s, one of the world’s biggest auction houses dealing in fine art, collectibles and real estate, has an enterprise value of about $3.7 billion, according to data compiled by Bloomberg.
Eli Goffmna sued Sotheby’s and its board Friday, claiming the broker failed to disclose enough information -- including financial projections and valuation analysis performed by its adviser, LionTree Advisors LLC -- for shareholders to vote on the deal. The suit follows a similar claim filed Wednesday by shareholder Shiva Stein.
The company said the deal is proceeding as planned.
“As the vast majority of all public company mergers over $100 million are the subject of shareholder litigation, the lawsuits filed were expected and routine,” Sotheby’s said in an emailed statement. “We do not expect the suits to have any impact on our targeted closing timing of the fourth quarter of this year.”
On July 12, Sotheby’s filed a proxy form, with more than 100 pages detailing merger talks and other relevant information for the shareholder vote at an unspecified date later in the year.
Drahi was among several parties discussing the potential merger with Sotheby’s executives and the board, according to the filing. These talks began in November 2018. Drahi had the highest offer and, unlike other parties, he didn’t require due diligence and had secured debt financing for the merger from BNP Paribas, the proxy statement showed.
The cases are Goffmna v. Sotheby’s, 19-cv-06733; Stein v. Sotheby’s, 19-cv-06669, U.S. District Court, Southern District of New York (Manhattan).
To contact the reporters on this story: Bob Van Voris in federal court in Manhattan at rvanvoris@bloomberg.net;Katya Kazakina in New York at kkazakina@bloomberg.net
To contact the editors responsible for this story: David Glovin at dglovin@bloomberg.net, Steve Stroth
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