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Christopher Burge
Christopher Burge selling Maurice de Vlaminck’s Paysage de banlieue for $22.5 million at Christie’s New York on May 4, 2011

Art Market Watch

NO GO FOR CHRISTIE’S IPO?
by Rachel Corbett

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Sergey Skaterschikov, the irrepressible author of Skate’s Art Market Research, had his readers buzzing this week when his semiannual report said almost in passing that the 75-year-old French tycoon François Pinault might want to take Christie’s auction house public with an IPO. According to Skate’s, Christie’s may have missed a golden opportunity this spring, which saw Prada plan to float shares on the Hong Kong stock market, and Sotheby’s insiders extensively selling their stock. Skate’s guesses that Pinault, whose Artemis Group owns Christie’s, could still try to sell off his holdings this fall.

“A partial exit through an IPO might actually be a far better strategy for Artemis than selling to cash-rich owners whose art market agendas are unclear or questionable and who could make Christie’s business model vulnerable following an ownership change,” the report argues.

Still, the company insists it’s not happening. “Artemis is not considering listing the company,” a spokesperson said. Christie’s is keeping mum on the subject, saying that it does not comment on "market speculation or rumors."

Though the auction house might deny it, insiders say that Christie’s is probably for sale and has been for sale for several years. The thinking is that Pinault had turned over directorship of his companies to his son, François-Henri Pinault, who is not interested in the art business. In late 2010, Christie’s kicked the veteran auction hand Edward Dolman upstairs, and brought in a new CEO, Steven Pleshette Murphy, a veteran of Disney, EMI, Simon & Schuster and Rodale Inc. Presumably, Murphy was hired to burnish the company for sale. Christie’s and Artemis are notoriously secretive about such moves, however.

At the time, Christie’s selling price was supposedly in excess of $2 billion, with the Qatari royal family as a potential buyer. Emir Hamad bin Khalifa al-Thani was quoted expressing interest in the company; the Qatari Royal Family, operating as Qatari Holdings, had had paid $2.36 billion for London’s Harrods department store and its other assets in May 2010.

Pinault paid about $1.2 billion for Chrisite’s when he took it private in 1998 -- finding out, to his surprise, that he had bought a company engaged in illegal price-fixing activities (but that is another story). His ownership of the company is not considered to have been wildly profitable, but Pinault would presumably prefer not to sell Christie’s at a loss. The billionaire was ranked this year by Forbes as the 67th richest man in the world, with an estimated fortune of $11.5 billion.

By contrast, A. Alfred Taubman, who bought Sotheby’s in 1983 and was forced out by the price-fixing scandal in 2002, is said to have taken 30 percent a year out of the business for several years. Sotheby’s, for its part, currently has a market cap of $2.57 billion, with the stock hovering around $38 per share.

Insiders say that the top offer for Christie’s back in 2010 was $1.3 billion. The auction business is considered to be a difficult one, despite the high-flying prices that make headlines. It’s perceived as too hard to understand, too easy to make costly mistakes in, and too much controlled by insiders.

“Auction houses and art businesses in general don’t make the kind of profit that justifies anything other than a vanity investment,” said Asian art collector and lawyer Jay Butterman.

With this in mind, the Skate’s report suggests that Pinault may be considering an IPO as an alternative to an outright sale. And while such a strategy might be good for the billionaire art collector, it would not necessarily be good for Christie’s or its prospective stockholders, since the firm would face new regulatory scrutiny. What’s more, an IPO is an expensive, complicated and time-consuming process.

"I’ve never understood why Sotheby’s is public," Reuters financial blogger Felix Salmon said in an email. Sotheby’s has long claimed that Christie’s has an advantage by being a private company. When it files its quarterly reports with the Securities and Exchange Commission, Sotheby’s must reveal its business failures and revenue losses, as well as its executive pay. In 2009, Sotheby’s complained to the SEC that disclosing such details “could result in competitive harm to the company.”

How the situation at Christie’s might play out remains to be seen. At Art Basel in 2008, art-newsletter scribe Josh Baer predicted that either Sotheby’s or Christie’s would be sold by the following year. Asked about his three-year-old prediction, Baer said, “It’s all just a guess.” Skate’s report ended on the same note. “At this point Christie’s sale or IPO remains purely theoretical.”

RACHEL CORBETT is the news editor of Artnet Magazine. She can be reached at Send Email

Left, François Pinault, the owner of Christie's, with auctioneer François de Ricqles, prior to the Yves Saint Laurent sale at Christie's Paris in 2009; and right, Christie's CEO Steven Pleshette Murphy
Left, François Pinault, the owner of Christie’s, with auctioneer François de Ricqles, prior to the Yves Saint Laurent sale at Christie’s Paris in 2009; and right, Christie’s CEO Steven Pleshette Murphy