Three shareholders have filed lawsuits against Sotheby’s in attempts to stop Patrick Drahi’s acquisition of the auction house.
“I am honoured that the board of Sotheby’s has decided to recommend my offer,” commented the Telecoms billionaire last month. But the deal cannot progress any further until the company’s shareholders approve Drahi’s $3.7 billion (£2.9 billion) offer.
Drahi’s transaction will see Sotheby’s return to private ownership after 30 years of public trading on the stock market, meaning the company’s management would no longer be required to answer to public shareholders.
Michael Kent, the most recent investor to file a suit, explained that there are almost 47 million outstanding shares of Sotheby’s common stock “held by hundreds, if not thousands, of individuals and entities scattered throughout the country.”
This week, Kent sought class-action status for his lawsuit in a US District Court in Delaware. He claimed that Sotheby’s recent proxy statement “omits material information” and is “false and misleading.”
Sotheby’s filed the proxy statement, which provides vital information for shareholders about the merger over more than 100 pages, with the Securities and Exchange Commission on 12 July.
Only days before Kent’s lawsuit was announced, Eli Goffmna and Shiva Stein also made claims against the auction house. Goffmna has alleged that the proxy statement gave “incomplete and misleading disclosures about the deal,” whilst Stein similarly claimed it “discloses management-prepared financial projections for [Sotheby’s] which are materially misleading.”
All three shareholders name CEO Tad Smith, board chairman Domenico de Sole, and deputy board chair Peregrine Andrew Morny Cavendish, among other board members.
In response to all three lawsuits, Sotheby’s released the following statement: “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.”
Sotheby’s have not yet disclosed an exact closing time for the deal.