Sotheby's ceases search for buyer as finances strengthen


NEW YORK -Sotheby's Holdings Inc. and its controlling shareholders, the family of jailed former Chairman A. Alfred Taubman, are no longer seeking to sell the art auction house.

While there were "substantive discussions with a significant number of people" about a sale of the world's No. 2 auctioneer, terms for a "satisfactory transaction" couldn't be reached, said William Ruprecht, Sotheby's chief executive. The company began looking for a buyer in June.

Sotheby's said its financial position has strengthened after the sale this month of its New York City headquarters for $175 million. The company also raised commissions by 2 percentage points for most sales last month amid record sales for contemporary and modern art.

At the same time, competitor Phillips, de Pury & Luxembourg is retreating after closing its Midtown Manhattan headquarters last month and reducing the size of its staff.

"The industry is going through some substantially positive changes" for Sotheby's, said George Sutton, an analyst with Craig Hallum Capital Group who has a "buy" rating on Sotheby's and doesn't personally own the stock. "The balance sheet is now supporting the business, which it didn't before."

Taubman, a shopping mall pioneer and the founder of Taubman Centers Inc., was convicted in December 2001 of conspiring to fix prices with Christie's International PLC, the No. 1 auctioneer, and stepped down as chairman. He was sentenced to a year-and-a-day in prison and is due for release June 13, or earlier with time credits.

The Taubman family, which holds a 62.9 percent voting control of Sotheby's, also is fighting a $4.25 billion hostile takeover attempt for Taubman Centers by No. 1 U.S. mall developer Simon Property Group Inc.

Sotheby's increased commissions on sales in New York, London and Geneva to 12 percent from 10 percent on all sales of more than $100,000, and boosted commissions to 20 percent from 19.5 percent on smaller sales. It also secured a $75 million one-year line of credit.

Annual costs have been trimmed by $70 million since 2000, said Diana Phillips, senior vice president and director of corporate affairs.

Sotheby's shares fell 7 cents to $8.25 on the New York Stock Exchange yesterday. They have declined 41 percent in the past year.

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