Sotheby\'s sets poison pill against investor challenge

Elite auction house Sotheby\'s on Friday adopted a poison-pill defense strategy to fend off a challenge by investor Dan Loeb\'s hedge fund Third Point. Sotheby\'s announced a plan to expand its share base in a rights issue that aimed to weaken Loeb\'s push to force out the company\'s chairman and chief executive William Ruprecht, and take a seat on the board for himself. The board said in a statement that the rights plan was \"in response to the recent rapid accumulations of significant portions of Sotheby\'s outstanding common stock, including through the use of derivatives.\" The plan \"guards against coercive tactics to gain control without paying all shareholders a premium for that control.\" The move came two days after Loeb announced an aggressive assault on the venerable art auction house. He criticized the management for falling behind rival Christie\'s, detailed what he called excessive management expenses on entertainment, and called for Ruprecht to be replaced. \"Sotheby\'s is like an old master painting in desperate need of restoration,\" Loeb wrote. Under the plan announced Friday, the company will issue to shareholders the right to purchase more shares cheaply, raising the cost to anyone trying to take over the company. But it will only be exercisable if someone acquires 10 percent of the shares in the company. Loeb has just short of that, 9.3 percent, but if he increases his stake to 10 percent, the rights plan would effectively make it harder to wrest control. The board stressed that its move would not prevent a takeover, \"but should encourage anyone seeking to acquire the company to negotiate with the board prior to attempting a takeover.\" Loeb lashed back Friday, calling the move \"disproportionate\" and accusing Ruprecht and the board of attempting to \"further entrench themselves.\" \"Third Point’s involvement does not pose a threat to either the company or our fellow shareholders, all of whom will benefit from our considerable efforts,\" Third Point said in a statement. \"We hope this will be the Ruprecht board\'s final snub to its shareholders. It would be unfortunate if they instead refuse to undertake a fresh start until one is imposed upon them during proxy season.\" Sotheby\'s shares finished down slightly to $50.77 for the day Friday but were up 4.75 percent for the week.