French giant Drahi seizes Sotheby's for $ 3.7 billion By Reuters

By Sudip Kar-Gupta, Svea Herbst-Bayliss and Mathieu Rosemain

PARIS / BOSTON (Reuters) – Franco-Israeli cable tycoon Patrick Drahi has made a surprise entry into the art world by separating Sotheby's $ 3.7 billion contract , marking the return to private ownership of the auction house after 31 years.

This acquisition allows Drahi to join French billionaire François Pinault, owner of Sotheby's leading rival, Christie's, at the top of New York's art and society.

Drahi joins an exclusive club of French billionaires active in the global art market, which also includes LVMH boss, Bernard Arnault, through his Louis Vuitton Foundation.

The expansion of Drahi in the United States also has old echoes Vivendi (PA :), the boss Jean-Marie Messier, who transformed a French water company in crisis into a global media giant holding stakes in well-established US institutions.

This deal also marks a new chapter for the 275-year-old auction house, which has become the destination of a new generation of wealth created on Wall Street, in Silicon Valley and around the world.

In many ways, being public has put Sotheby's at a disadvantage compared to its main American rival, Christie's, who was already private, said art experts.

"From now on, the company can become more flexible and agile as a private company and it will be interesting to see the changes that will be made," said Abigail Asher, partner at Guggenheim, an international arts consultant.

Founded in London in 1744 before expanding overseas in the 20th century, Sotheby's had the distinction of being the oldest company listed on the New York Stock Exchange.

Among the famous items sold by Sotheby's include the collections of the late Duchess of Windsor, the personal collection of the artist Andy Warhol and the painting "The Scream" by Edvard Munch.

Sotheby's stated that BidFair USA, an acquisition vehicle set up by Drahi, had offered $ 57 in cash per share to buy it back. The offer represented a premium of 61% over Sotheby's closing price on Friday, and gave it a market capitalization of $ 2.6 billion.

LOEB WELCOMES OFFER

The art world has recently been a favorite spot for investors looking to generate additional returns in a world characterized by extremely low interest rates, the prices of many expensive art works having regularly increased.

A report published in March by Swiss bank UBS and Art Basel indicates that the global art market has experienced a further rise in 2018.

Drahi – who is best known for his debt-fueled acquisition engineering in cable and telecom activities through the Altice group that he controls – announced that he would fund this acquisition by means of financing set up by a French bank. BNP Paribas (PA 🙂 and own funds provided by its own funds.

Drahi has also sold non-core assets in recent years to alleviate concerns about the level of debt of his businesses.

The businessman said that he would not sell shares of his company Altice Europe, but would cash a small stake in his Altice USA division. Shares in Altice USA fell about 2% on Monday.

Born in Morocco, Drahi, 55, was trained at the Polytechnique selective school in Paris and has dual French and Israeli nationality.

Despite the control of influential French media such as the liberal left Liberation and the country's most-watched news channel, BFM TV, Drahi has been sheltered from the elite gatherings of the French establishment and has passed much of his time between Switzerland, the United States and Israel.

"This investment will further demonstrate my family's attachment to the United States, a country where we have been very well received since the successful acquisitions of Suddenlink in 2015, Cablevision (NYSE 🙂 in 2016 and most recently Cheddar", Drahi said in a statement. statement, referring to the two US cable companies and an online news network, respectively.

He said he has full confidence in the leadership of Sotheby's and does not expect a change in the company's strategy.

About five years ago, Sotheby's put an end to a long-standing battle with Third Point, the hedge fund of Daniel Loeb, an activist investor, by asking Loeb and two of his associates to join the board of directors of Sotheby's & # 39; s.

Loeb, a leading art collector, welcomed the sale Monday.

The award "confirms the value we saw when we first invested in Sotheby's and rewards long-term investors such as Third Point who believed in its potential," Loeb told Reuters.

BNP Paribas and Morgan Stanley (NYSE 🙂 advised Drahi, while LionTree Advisors was working on behalf of Sotheby's.