Art & Finance Newsletter #31 - Sotheby's Is Having A Moment
This edition of the newsletter is heavy on Sotheby's news. If you've been living under a rock then it will be news to you that the auction house accepted the purchase offer of USD 3.7 bio made by French-Portuguese telecom magnate.
In other Sotheby's related news they are facing a lawsuit for an unfortunate situation involving a Russian oligarch and a Swiss businessman/art dealer. Busy days in the Sotheby's office.
Onto the art market...
Sotheby's Sold to Private Individual
Sotheby’s last week announced that it has agreed to a purchase offer from French telecommunications billionaire and art collector Patrick Drahi for $3.7 billion, or $57 a share, which is a 61% premium on the last traded price. Drahi’s purchase vehicle is BidFair USA, and he is paying for it with $1.5 billion of his own funds and the remainder in loans, according to a Wall Street Journal report.
With Drahi in charge, Sotheby’s could pursue growth without the glare of public investors’ scrutiny and the pressure to deliver quarterly earnings over advancing longer-term goals. Going private also affords Sotheby’s the ability to offer guarantees to owners of art collections before those works of art are auctioned.
“Being a public company places significant constraints, especially in the market expectations for quarterly performance and the like,” said Jerry Wind, Wharton emeritus professor of marketing.
Wind recalled that Sotheby’s last year lost to Christie’s the assignment to sell the Rockefeller collection, which eventually went for $832.6 million, the highest deal value for a single collection. That came a year after Christie’s beat it to acquire Leonardo Da Vinci’s Salvator Mundi painting, which was sold to a Saudi prince for $450 million, a record for the single highest price for a piece of art. “Both of them required guarantees, and a private company has a much easier time to provide the guarantees,” Wind said.
Warton School - Sotheby's Sold to Private Individual
Sotheby's Must Face Lawsuit
A federal judge in New York rejected Sotheby’s bid to dismiss a $380 million lawsuit where Russian billionaire Dmitry Rybolovlev accused the auction house of helping his longtime art dealer’s scheme to overcharge him on dozens of masterworks.
U.S. District Judge Jesse Furman said Sotheby’s failed to establish that the case did not belong in his court because Rybolovlev was already litigating in Switzerland, where much of the key evidence and many witnesses were located, and that principles of international comity justified dismissal.
Furman found no showing that New York was “genuinely inconvenient” and Switzerland was “significantly preferable,” saying the New York case had made more progress and Sotheby’s might save money by defending itself in its home forum.
Sotheby’s has called Rybolovlev’s claims against it baseless. Lawyers for the auction house were not immediately available for comment. A lawyer for Rybolovlev had no immediate comment.
The case is part of a multi-year effort by Rybolovlev, 52, to recoup alleged losses he has blamed on the art dealer, Yves Bouvier, who has denied wrongdoing. Litigation has also ensued in France, Monaco and Singapore.
Rybolovlev, through his companies Accent Delight International Ltd and Xitrans Finance Ltd, accused Bouvier of overcharging him by more than $1 billion on 38 artworks, for which he paid in excess of $2 billion between 2003 and 2015.
According to the New York complaint, Sotheby’s had a hand in 14 of the transactions, and had been “the willing auction house that knowingly and intentionally made the fraud possible” because it knew how much Bouvier was paying the sellers.
Reuters - Sotheby's Must Face Lawsuit
Italian Court Determines That the Ferrari 250 GTO Is a Work of Art
An Italian judge ruled that a sports car can, in fact, be a work of art. The decision has granted the coveted designation to the Ferrari 250 GTO, offering the vehicle the same protections from reproductions and imitations as famous paintings and sculptures.
“The customization of the car’s lines and its aesthetic elements have made the 250 GTO unique, a true automobile icon,” declared an Italian commercial tribunal in Bologna, finding that the car’s “artistic merits” had been recognized by “numerous awards and official testaments.”
The decision came down after Ferrari filed a legal complaint against another Modena company that had announced plans to produce replicas of the famed vehicle, which holds the auction record for the most expensive classic car.
“It’s the first time in Italy that a car has been recognized as a work of art,” a Ferrari spokesperson told the Telegraph. “It’s not just its beauty that makes it special—it also has a long racing history.”
Now that the car’s form and intellectual property rights have been acknowledged by the court, only Ferrari can produce, commercialize, and promote the classic vehicle.
Artnet - Italian Court Determines That the Ferrari 250 GTO Is a Work of Art
There are a few of you that live in London who I have not reached out to yet...I will shortly!
To the others, if you pass through London these weeks do be in touch.
Speak soon,
Blake