One of the funny things about financial journalism and the web is the amplification of speculation. What does that mean? Well, modern day finance is all about the smart money (or, at least, it was until this year.) So financial journalism has tried to keep up by out smarting the smart money. You can see this at Breaking Views or Dealbook or Alphaville on a daily basis as journalists try to think like bankers. (There’s no evidence yet that this is necessarily a good thing.)
With that in mind, the FT’s Alphaville blog took a stab at Francois Pinault’s Artemis and decided it needs to lighten the debt load a little with the sale of Christie’s. Here’s the reasoning:
Consider the state of the French retail tycoon’s assets. Artemis has 40 per cent of luxury goods group PPR, whose shares have fallen around two-thirds this year, leaving the holding worth around €1.8bn. Then there’s five per cent of construction group’s Vinci, down 44 per cent and now worth about €650, and also two per cent of Bouygues – off 50 per cent to about €200m. There are other private assets in the Artemis stable – not least Chateau Latour, worth around €200m, and a very good art collection put at €100m.
We’re not sure where they get the $150 million valuation on M. Pinault’s art collection, which seems quite low, even with fall in Contemporary art prices. Nonetheless, the solution offered for the fall in Artemis’s holdings is to sell Christie’s for €500 million. It’s a nice idea but who would buy at a time like this? No one in the luxury goods sector is acquiring right now.
Those who claim inside knowledge reckon one or two private equity houses have shown interest in Christie’s. The art bubble might well have burst (belatedly), but Christie’s itself remains an intrinsically valuable name.
As absurd as that may sound with all of the trouble private equity firms are facing, there is some sense to it. Private equity prefers to buy when no one else does. Many of the biggest firms are sitting on lots of cash but they’re still waiting to see what happens with distressed debt and other assets that might come free.
So let’s chalk this one up to a nice intellectual exercise for a slow news week at the end of the year.
Is Christie’s About to Come Under the Hammer? (FT Alphaville)