Two Sotheby’s investors have filed a lawsuit in New York City in attempt to block BidFair USA’s purchase of the auction house. BidFair, the parent company owned by Patrick Drahi, announced its purchase of the auction house in June for $3.7 billion. Shareholders however, are claiming that the deal was misleading and its disclosures were incomplete, Bloomberg reported.
Drahi had planned to take the company private, meaning it would no longer be required to report to public shareholders. According to Bloomberg, the investors sued the auction house and its board, citing their “failure to disclose enough information – including financial projections and valuation analysis performed by its adviser, LionTree Advisors LLC – for shareholders to vote on the deal.”
Sotheby’s responded by saying that the lawsuits were expected but are not being taken seriously. In an email statement, a spokesperson said, “As the vast majority of all public company mergers over $100 million are the subject of shareholder litigation, the lawsuits 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.”
When the deal was announced in June, Sotheby’s CEO Tad Smith said, “Patrick founded and leads some of the most succesful telecommunications, media and digital companies in the world. He has a long-term view and shares our brand vision for great client service and employing innovation to enhance the value of the company for clients and employees.”
It was also reported that Drahi had been among a group of interested buyers who were discussing the potential merger with Sotheby’s executives and the board. Acquisition talks began late last year and Drahi ultimately had the highest offer. Apart from that however, he was unique in that he didn’t require the due diligence and had already secured debt financing from BNP Paribas, as per the proxy statement.