EXCLUSIVE: Sotheby's CEO Says Going Private Will Spur Innovation

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Jayne Russell/Anadolu Agency/Getty Images
June 17, 2019

By Carlo Versano

Sotheby's, one of the world's oldest auction houses, is being acquired by Patrick Drahi, the founder and controlling shareholder of European telecom giant Altice, in a $3.7 billion deal, the company announced Monday.

Altice USA, a subsidiary of Altice, is the parent company of Cheddar.

Drahi is a "long-term investor with a long-term view," Sotheby's CEO Tad Smith told Cheddar in an exclusive interview Monday. "That should behoove both clients and employees."

"We're thrilled," he added.

The deal will return Sotheby's to private ownership after 31 years as a public company, traded on the New York Stock Exchange under the ticker BID. Sotheby's will be controlled by BidFair USA, a venture owned and controlled by Drahi, who is estimated to be worth $8.6 billion, according to the Bloomberg Billionaires Index.

Sotheby's shares surged nearly 60 percent after the deal was announced. The stock had been down nearly 40 percent over the past year.

"I am making this investment for my family, through my personal holding, with a very long-term perspective," Drahi said in a statement. "There is no capital link with Altice Europe or Altice USA."

Drahi said he does not anticipate any changes to Sotheby's management team, which will continue to operate with his "full support."

Smith said the new corporate structure would allow Sotheby's to continue to invest in modernizing the client experience for the digital age. A "significant" portion of Sotheby's client base is under 40, he noted, and the majority of the assets that go under the hammer sell for less than $10,000.

While the nine-figure Modiglianis and Basquiats generate the headlines, clients are just as likely to come to Sotheby's to bid on everything from vintage cuff links to moon dust, Smith said.

"The global portfolio of demand looks attractive at the moment," he added.

Sotheby's, like other auction houses, has suffered from the ongoing trade war between the U.S. and China. Art and antiques from China are included in the tariffs that President Trump slapped on Chinese imports.

Last year, China surpassed the U.K. to become the second-largest art market in the world behind the United States as its billionaire and millionaire class have become fixtures of the auction scene.

But Smith said the auction industry is resilient and the 275-year-old Sotheby's benefits from an "enduringly powerful business model."

"We will adapt" to the trade war, he said. "We have for centuries."