Redline Announces Artnet Share Price for Hostile Takeover, Loses Ally

On Friday afternoon, Redline Capital Management SA announced the price it is planning to offer Artnet shareholders as part of its long-planned hostile takeover of the company. In the art investment newsletter Skate’s, founded by Sergey Skaterskhov, who has led the takeover efforts on behalf of Redline, it was announced that the company will pay “EUR 6.4 per share, a generous 33% premium to artnetAG’s current share price (as of closing on August 30, 2012).” The exact nature of the offer has led both sides to claim victory, though Bloomberg declared the deal dead in the water following last month’s Annual General Meeting of shareholders.

Arnet is best known for its auction price database, which lists the prices artists and works have achieved at auction, which helps set a sort of “blue book value” for art. The deal to buy the company won’t go into effect unless Redline secures 56 percent of the company, a lower figure than expected, since at that shareholder meeting, Hans Neuendorf and his son Jacob Pabst, who currently control the company, were said to pass a “poison pill” measure ensuring no major changes to the company would be made without a 75 percent majority, giving them veto power in perpetuity with the 26 percent of the company they own. The Skate’s newsletter announcing the price for the hostile takover says that those changes “cannot be effected.”

“The trade register in Berlin has declared that they won’t register whatever has been decided during the tumultuous AGM of Artnet on August 8,” wrote Rüdiger K. Weng, whose company Weng Fine Art had been working with Redline on the takeover, in an e-mail. “Therefore Neuendorf’s poison pill won’t go into effect. Redline will try to buy the majority of the shares and then call for another AGM.”

Mr. Neuendorf had a different take on the offer.

“The stock market apparently does not believe in the offer. The stock quickly declined today to Euro 5,20 after initially jumping to 5,80 in a knee jerk reaction,” Mr. Neuendorf wrote in an e-mail. “The offer calls for a minimum acceptance of 56% of the stockholders which is impossible as Sergey well knows given the distribution of stock holdings at artnet AG. He had already announced in Skates after the AGM that he would attach such a limit as a way of going through with his legal obligation to make the offer while making it impossible to attain.”

Skates also announced in their newsletter that Redline had parted ways with Mr. Weng, who had joined his shares with them in an effort to amass a larger percentage of the company.

“My board has decided that Weng Fine Art should move out of the takeover of Artnet as they (and me) don’t want to invest more time into this complex project,” Mr. Weng wrote, on that matter.

Redline Announces Artnet Share Price for Hostile Takeover, Loses Ally