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Sotheby's is being sold. French-Israeli cable mogul Patrick Drahi is paying $3.7 billion for the auction house, which is 60% more than it was worth on the public markets at the close of trade on Friday.
Why it matters: Under private ownership, Sotheby's might be better able to compete with archrival Christie's. Drahi won't stop at $3.7 billion in his attempt to equalize the two houses.
Driving the news: Drahi is the archetypal cosmopolitan billionaire. A Jew born in Casablanca who is married to a Greek Orthodox woman of Syrian descent, he lives in Switzerland and has French, Portuguese, and Israeli citizenship. He might well become an American too, now that he owns Sotheby's.
Background: To follow the history of Sotheby's is in many ways to watch the evolution of capitalism itself.
- Founded in London in 1744, the auction house dominated fine-art trading for centuries.
- In 1964, seeing where global wealth was centered, Sotheby's bought Parke-Bernet of New York and started expanding aggressively.
- When it ran into financial trouble in 1983, it was bought for $125 million by Alfred Taubman, who ended up being jailed for price-fixing with rival Christie's.
- In 1998, Christie's was bought by French tycoon François Pinault for $1.2 billion, setting off a 20-year period during which Christie's, with no particular need to make a profit, out-competed Sotheby's.
- The value of Christie's to Pinault is not financial. Rather, the auction house gives him unparalleled insight into the behavior of the world's wealthiest individuals, and also effectively acts as his primary art acquisition vehicle.
The bottom line: Buying Sotheby's gives Drahi much more clout among the global ultra-wealthy than he would get from buying $3.7 billion of art. It will also increase his name recognition in the U.S., where he has long harbored ambitions to build a major cable empire.