Sotheby's to review capital plans, balance sheet


Sotheby's Inc said it will review its capital allocation strategy, two weeks after activist investors Daniel Loeb and Nelson Peltz revealed big stakes in the auction company.

Sotheby's shares rose 1.4 percent in early trade.

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As of June 30, the company had long-term debt of $515.2 million. The company's debt-to-equity ratio stands at 49.5 percent compared to the peer median of 31.6 percent.

The company reported a 3 percent fall in revenue in its most recent second-quarter, hurt by a decline in auction commissions.

Sotheby's said it will report the results of its capital allocation review to investors in early 2014.

"Sotheby's is committed to healthy two-way communication with our shareholders as we pursue our common goal of a strong, growing, competitive Sotheby's open to new opportunities," said Chief Executive Bill Ruprecht in a statement on Wednesday.

The move comes just days after activist investor Daniel Loeb's Third Point LLC revealed a 5.74 percent stake in Sotheby's, making it the company's second-largest shareholder. ()

Loeb has said he would engage in dialogue with Sotheby's board or management, which may relate to potential changes of strategy and leadership at the company.

Nelson Peltz of Trian Fund Management also revealed a new stake of roughly 3 percent in the auctioneer in August.

As a part of the review, Sotheby's will assess the use of incremental debt to fund certain businesses, its credit rating and funding requirements for certain strategic initiatives under its capital review process.

Sotheby's shares, which have risen about 37.4 percent in a year, were trading at $47.98 in early trading on the New York Stock Exchange on Wednesday.