NEW YORK (AP) — Sotheby's has adopted a shareholder rights plan only days after activist investor Daniel Loeb's hedge fund disclosed it has increased its stake in the auction house and called for the CEO's resignation.
The company disclosed the adoption of the rights plan, also known as a poison pill, on Friday. Such plans won't prevent a takeover but can make it more difficult and costly for an unwanted buyer to take control of a company.
On Wednesday, Loeb disclosed in a regulatory filing that his hedge fund, Third Point LLC, had increased its stake in Sotheby's to 9.3 percent, making it the company's biggest shareholder.
Loeb also sent a letter to Chairman and CEO William Ruprecht, calling for his resignation and claiming that the company has "a lack of leadership and strategic vision."
Sotheby's said in a statement that it would not comment on the letter.
The company said Friday that its shareholder rights plan will expire in a year unless ratified by shareholders. The plan does not apply to any qualifying offers made for all shares that treat all stockholders equally and that result in the bidder owning a majority of its stock after 100 days. The rights give shareholders a chance to buy more stock cheaply once an unwelcome bidder accumulates a 10 percent stake, making it more costly to buy the rest of the company
Sotheby's said that the rights should encourage anyone looking to buy the company to talk with its board before making a takeover attempt.
Sotheby's stock rose 3 cents to $50.97 in morning trading. They hit a 52-week high of $52 on Thursday.