Sotheby’s announced its 3rd Quarter results which were expected to be down substantially from the previous year and, in that respect, did not disappoint. The calendar and 2016’s overall reduction in sales volume dropped gross sales by 26%. The company continues to take charges for the potential earn-out of its acquisition of Art Agency, Partners.
There some bright spots too, according to CFO Michael Goss:
These factors are somewhat mitigated by an increase in Auction Commission Margin from 15.3% to 16.5%, a reduced level of incentive and share-based compensation expense, a lower effective income tax rate, and diluted earnings per share benefited from a lower number of shares outstanding due to share repurchases made over the last twelve months.
The financials aside, there was bigger news. Sotheby’s has agreed to a board member to represent Taikang Insurance’s plurality stake. As part of the deal, Taikang has agreed not to buy more than 15% of the company’s stock (likely where it’s 13.5% stake will end up once the buy back has been completed.)
This gives Sotheby’s three years of breathing room while somewhat putting a floor under the company’s stock. Here’s the announcement about the board member and standstill agreement:
Sotheby’s announced today that Linus Wing Lam Cheung has been unanimously elected to join the Company’s Board of Directors. Mr. Cheung is the retired Chief Executive Officer of Hong Kong Telecom and a renowned collector of Chinese Art.
Mr. Cheung served as Executive Chairman of Asia Television Limited from 2008 to 2009, Chief Executive Officer of Hong Kong Telecom from 1994 to 2000 and, following Hong Kong Telecom’s merger with Pacific Century Cyberworks (PCCW) in 2000, PCCW’s Deputy Chairman until 2004.
Mr. Cheung has served on the board of China Unicom Ltd. since 2004 and HK Resort International Ltd. since 2006. Previously, he served on the boards of Cathay Pacific Airways, Hong Kong Telecom, Cable and Wireless plc, and Taikang Insurance.
In connection with Mr. Cheung’s appointment, Sotheby’s and its largest shareholder, Taikang Insurance Group, have entered into an agreement whereby Taikang has agreed it will not increase its ownership position beyond 15% for a period of three years, subject to certain conditions.
