Art Market

Sotheby’s shareholders sued the auction house to stop Patrick Drahi’s acquisition bid.

Benjamin Sutton
Jul 22, 2019 5:08PM, via Bloomberg

Sotheby’s evening sale of post-war and contemporary art in New York in May 2019. Photo courtesy Sotheby’s.

Two Sotheby’s shareholders are suing the auction house and calling on a judge in New York City to block its planned sale to French telecom tycoon Patrick Drahi. In separate lawsuits filed last week by Eli Goffmna and Shiva Stein, Sotheby’s is accused of failing to disclose sufficient information about the terms of the deal and the company’s valuation, performed by its financial advisor LionTree Advisors LLC, to allow shareholders to vote on Drahi’s offer.

In her suit, filed on July 19th, Goffmna alleges that Sotheby’s filed “a materially incomplete and misleading” proxy statement with the U.S. Securities and Exchange Commission (SEC), and that the statement “misrepresents or omits material information that is necessary for [Sotheby’s] shareholders to make an informed voting decision.” In a lawsuit filed two days earlier, Stein made similar claims, including that “the proxy statement discloses management-prepared financial projections for [Sotheby’s] which are materially misleading.”

In a statement provided to Bloomberg, Sotheby’s said:

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. [. . .] We do not expect the suits to have any impact on our targeted closing timing of the fourth quarter of this year.

It’s unclear whether or not the lawsuits will delay Sotheby’s shareholders’ vote on Drahi’s acquisition offer. A date for that vote has not yet been set, but Sotheby’s expected the sale to be finalized by the end of the year. In the meantime, the company has said it remains open to competing offers.

Further Reading: Sotheby’s Going Private Will Change the Art Market Forever

Benjamin Sutton