Under pressure from activist investors, Sotheby’s (BID) says it will repurchase BID stock and issue a special dividend.
BID stock rose in Wednesday trading on news of the plan, which will return about $450 million to the 270-year-old auction house’s shareholders. In March, Sotheby’s will pay a $300 million special dividend to investors. It will spend an additional $150 million to buyback BID stock, Reuters notes.
Two hedge funds — Mick McGuire’s Marcato Capital Management and Daniel Loeb’s Third Point — have been urging the auction house to return more money to investors since last year.
$450 million may not be enough to appease the hedge funds. Marcato issued a statement indicating that “Sotheby’s can and should return a total of $1 billion of capital to shareholders within 12 months.” Last year, Loeb called for Sotheby’s CEO to step aside. In October, Sotheby’s adopted a “poison pill” defense to discourage a potential takeover bid.
BID stock rose about 2% in Wednesday morning trading. BID stock has risen about 35% over the past 12 months. BID stock closed at $48.88 a share on Tuesday.