Patrick Drahi, the billionaire founder of telecoms group Altice, has agreed to buy famed auction house Sotheby’s in a $3.7bn deal including debt that will return the company to private ownership after 31 years.
The transaction will see Mr Drahi’s BidFair holding company pay $57 per share to acquire all of Sotheby’s common stock, a 61 per cent premium to its most recent closing price.
The takeover by the Franco-Israeli entrepreneur will mean the world’s two largest auction houses are both in the private hands of French billionaires. Two decades ago Sotheby’s arch rival Christie’s was bought by Artemis, the holding company of France’s Pinault family, for $1.2bn.
Sotheby’s and Christie’s have had a spree of record-breaking art auctions over the past two years, as the art market recovered from a lull that coincided with a broad downturn in financial markets. The resurgence of the art market was cemented with the $450m sale of a contested Leonardo da Vinci painting in 2017. After that, records have been set with multimillion-dollar sales of works by David Hockney, Claude Monet and Jeff Koons.
While Christie’s was out of public glare, Sotheby’s was thrown into turmoil multiple times by activist interventions. The group attracted a blistering public attack from hedge fund managers Dan Loeb and Mick McGuire, with the latter accusing it of “wilful neglect” in 2015.
Mr Loeb’s Third Point hedge fund is Sotheby’s second-biggest shareholder with a 14.3 per cent stake and sits on the company’s board.
Sotheby’s worked to reign in costs and diffuse tensions with several of its large shareholders. And as the art market rebounded in 2016 and 2017, shares of the company rallied back towards their all-time high; a peak hit in 2007 that gave the group an equity valuation of $3.8bn has still not been hit.
Domenico De Sole, chairman of Sotheby’s, said that the board “enthusiastically supports Mr. Drahi’s offer, which delivers a significant premium to market for our shareholders.”
Mr Drahi is best known for his activity in the telecoms and media sector over the past two decades in which he has used debt-fuelled acquisitions to build Altice, a telecoms and media empire that expanded from its roots in France to the US, Portugal, Israel and the Dominican Republic.
In January last year, Mr Drahi announced that Altice would spin off its US business and restructure its European operations after poor results heightened concerns over the company’s ability to keep servicing its then €50bn debt pile.
Since then Altice’s US arm has posted solid performance, while the European business is languishing against a backdrop of a highly-competitive environment in its largest market of France.