Tags: Sothebys | proxy | Delaware | poison pill

Sotheby's Poison Pill Hinders Proxy Fight, Lawyer Contends

Tuesday, 29 Apr 2014 12:19 PM

Sotheby’s is misusing an anti-takeover defense to hinder Third Point LLC’s proxy fight to add directors to the auction house’s board, a lawyer for the hedge fund argued.

Sotheby’s poison-pill defense shouldn’t bar Third Point, a $14.5 billion hedge fund run by Dan Loeb, from owning more than 10 percent of Sotheby’s shares because the fund isn’t angling for control of the board, Third Point lawyer William Lafferty told a judge today. Loeb wants Sotheby’s May 6 annual meeting delayed so the defensive measure can be fully reviewed.

Delaware Chancery Court Judge Donald Parsons’ ruling on whether such anti-takeover measures can be extended to shareholder activists’ proxy fights will have wide impact given Delaware’s status as the corporate home to more than half the publicly traded companies in the U.S. and more than three-fifths of Fortune 500 firms.

“The directors of Delaware corporations may not use the power of their office to preserve their board seats simply because they disagree” with views of some stockholders, Lafferty told Parsons at a hearing in Wilmington today.

Loeb contends Sotheby’s decision to trigger the pill if activist investors buy more than 10 percent of its shares, while allowing passive investors to buy as much as 20 percent, leaves the measure open to attack.

Sotheby’s officials defended the poison pill in the past, saying it was “designed to limit the ability of any person or group to seize control of the company without appropriately compensating all Sotheby’s shareholders.”

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Sotheby's is misusing an anti-takeover defense to hinder Third Point LLC's proxy fight to add directors to the auction house's board, a lawyer for the hedge fund argued.
Sothebys, proxy, Delaware, poison pill
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2014-19-29
Tuesday, 29 Apr 2014 12:19 PM
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