According to Sotheby's, the company and the Taubman family have agreed to terminate, effective immediately, the process commenced on June 3, 2002, regarding the exploration of a possible sale or merger of the company or sale of the Taubman stake in the company.
As the New York Times dryly put it, "Sotheby's Holdings, the auction house that has struggled through a price-fixing scandal and financial troubles, has been successful in selling multimillion-dollar paintings in this poor economy, but cannot seem to find a buyer for itself."
Over the last eight months, Sotheby's and the Taubman family conducted what Sotheby's termed "a comprehensive process to explore a possible sale of Sotheby's." According to Sotheby's, "Despite considerable interest in the company, a satisfactory transaction could not be reached. Consequently, Sotheby's Board and the Taubman family agreed to terminate the process."
The New York Times' article said that Taubman, "faced with the prospect of losing the shopping center empire he spent a lifetime creating (over a hostile takeover from the Simon Property Group),... wants more than ever to hang on to Sotheby's, which he considers the jewel of his businesses."
According to the New York Times article, Sotheby's held talks with Edgar Bronfman Jr., who is on the board of Vivendi Universal; eBay, the online auction site; the American International Group; and UBS, the Swiss bank, among others. These courtships fell apart early in the negotiations, according to several officials at Sotheby's, who insisted on anonymity.
Last April, Taubman was sentenced to a year and a day in prison for his role in the price-fixing scheme with his counterpart at Christie's. Some people at the auction house told the New York Times that it was too hard to negotiate a sale of Sotheby's while its former chairman and largest shareholder is in jail. Moreover, no one was willing to offer a price Taubman considered acceptable.
After losing nearly $42 million last fiscal year, Sotheby's has been trying to improve its poor financial position. Last month, it sold its ten-story headquarters to RFR Holding for $175 million, and then leased the building back for $18 million a year. It then secured a $75 million one-year credit facility. The company also says that it has reduced its cost base by over $70 million since 2000. Reportedly that will still not be enough to stem the tide of red ink in the short term as the company is expected to post a second straight annual loss for 2002 early this month. Also, according to the New York Times and other media, Sotheby's will unfortunately continue to fire people to try to "save" itself to profitability.
In a related story (see below for details) the company is closing down its web auction sales on eBay because they were too much of a drain on an already financially floundering company.