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baron ups sotheby's stake
by Andrew Decker


In a buying spree that began on February 18 and extended through July 21, New York's Baron Capital Group, Inc., has acquired 17.4 million shares of Sotheby's Holdings Inc., which accounts for 43.8 percent of Sotheby's Class A shares. Baron bought 5.27 million shares from members of the Bass family on July 1. The Baron group's total investment in Sotheby's is approximately $375 million at prices ranging roughly from $20 to $23 per share.

Sotheby's Class A shares have voting rights of one vote per share. Sotheby's owner A. Alfred Taubman still owns and retains 63 percent of the voting rights though his holding of 13.2 million B shares, or 78 percent of the total B shares, which carry ten votes per share. The B shares are not traded on Wall Street. At mid-day on July 30, 1998, Sotheby's stock was trading at 22-7/8, close to the stock's 52-week high of 24-3/4. Sotheby's 52-week low was 16-1/2.

Sotheby's is now the only international auction house that remains a public company. In May, Francois Pinault tendered an offer of £4 per share to acquire Christie's stock, which had been trading at around £2.65 before he made his run. The deal was approved in July.

In a Mar. 16 article in Barron's, Ron Baron (who declined to be interviewed for this report) termed Sotheby's "very profitable" with "a high return on investment." He cited Sotheby's new building, the opening of the French auction market to foreign companies, and the modest price of the company's stock as his reasons for investing in it. He expected that Sotheby's earnings "should double from this year's $1.05 a share within four years. Then double again. So four years from now, the stock is going to be twice today's price. It will be over 40. If we are lucky, and others see it, it'll sell at 50."

In a far less significant deal involving Sotheby's stock, in early June, Sotheby's chairman Diana D. Brooks exercised options on 55,700 shares of Sotheby's Class A stock, worth around $1.3 million. The options were to expire in 1999.


ANDREW DECKER writes on art and the art market.

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