During the Third Quarter, Sotheby’s (BID, Financial) (“BID” or the “Company”) was sold to an entity controlled by Patrick Drahi. The sale marked the end of our six”year investment in BID, which began as an activist campaign at an “old master painting desperately in need of a restoration” and ended with an attractive acquisition at a 61% premium following a total operational overhaul of the business. When we first invested in Sotheby’s in 2013, we saw an iconic brand in need of new leadership after many years of middling growth despite strong art market tailwinds. The Sotheby’s campaign was hard”fought but ended with Dan and two Third Point director nominees joining the board. As a director on several committees, Dan worked closely with the rest of the board to bring in Tad Smith as CEO. Tad and his team (many of whom he recruited) revamped Sotheby’s corporate strategy around revenue growth and expense discipline and embraced technology to transform a centuries” old business model. They also dramatically improved capital allocation practices and optimized the balance sheet.
All these initiatives took time to play out but ultimately put the Company on a solid path to growth and made it an attractive acquisition target. In the five years Dan spent on the Board, our team collaborated with Sotheby’s in numerous ways, advising both formally and informally on communications, strategy, and shareholder interests, something made possible by the trust that developed between us. Sotheby’s is far stronger after our six years of involvement and we are confident that returning the Company to private hands is an excellent outcome for all of Sotheby’s stakeholders.
From Daniel Loeb (Trades, Portfolio)'s Third Point third-quarter 2019 letter.
