(Adds quote from lawsuit, background)
By Svea Herbst-Bayliss
BOSTON, March 25 (Reuters) - Daniel Loeb’s Third Point on Tuesday sued Sotheby’s to remove poison pill restrictions that block the hedge fund from acquiring up to 20 percent of the auction house’s stock.
Loeb’s firm, which already owns 9.6 percent of the company, said in the lawsuit that the poison pill unfairly targets activist shareholders like himself, seeking to shake up the board of directors. But it allows passive investors to buy up to 20 percent of the company.
The “poison pill is not a reasonable corporate response to a takeover threat, but rather an improper attempt to thwart Third Point’s proxy contest and ensure that the current board members remain firmly entrenched,” the lawsuit said.
The lawsuit was filed on Tuesday in Delaware Chancery Court.
Loeb, an art collector who began building his stake in Sotheby’s this past summer, last month nominated three directors, including himself, to the company’s board.
Sotheby’s adopted the poison pill, or shareholder rights plan, in October after Loeb began turning up the heat on the company by comparing it to an “old master painting in desperate need of restoration” and urging that its chief executive be replaced.
On Tuesday, Sotheby’s called the rights plan “an important tool to ensure that all Sotheby’s shareholders are treated fairly,” a spokeswoman said in a statement.
Last week, Third Point said the company had refused to amend the terms of the rights plan to let the hedge fund boost its stake up to 20 percent. (Reporting by Svea Herbst-Bayliss; Editing by Richard Valdmanis, Bernard Orr)