June 20, 2019 / 3:11 PM / 4 months ago

Sotheby’s take private to be backed with up to US$2bn of debt

LONDON, June 20 (LPC) - French media and telecom entrepreneur and art collector Patrick Drahi is backing his US$3.7bn acquisition of art auction house Sotheby’s with a debt financing underwritten by BNP Paribas.

The financing to back the acquisition could total around US$2bn-equivalent, several sources said.

Sole financing provider is a prestigious role for BNP Paribas. Deals of this size typically have more than one bank, however banks groups are normally a lot smaller on public-to-privates to minimise the risk on information leakage.

The likelihood is that BNP Paribas will bring in a number of other banks to share the underwriting risk with. There are apparently large undrawns on the transaction which can be capital intensive and require more banks, sources said.

There will be no capital links with Altice, a spokesperson from Altice said.

The acquisition will also be funded through an equity financing.

“Auction houses are massively cyclical, it feels like a vanity project,” a head of leveraged finance said.

A second head of leveraged finance said: “There is so much debt on his other business ventures such as Altice and now this, Drahi could be the poster boy for the next financial crisis.”

Sotheby’s has agreed to be acquired by BidFair USA, an acquisition vehicle wholly-owned by Drahi, which had offered US$57 in cash per share to buy out Sotheby’s.

The offer price represents a premium of 61% to Sotheby’s closing price on June 14 2019, and a 56.3% premium to the company’s 30 trading-day volume weighted average share price.

The transaction would result in Sotheby’s returning to private ownership after 31 years as a public company traded on the New York Stock Exchange.

BNP Paribas and Morgan Stanley are acting as financial advisers to BidFair. Hughes Hubbard & Reed and Ropes & Gray International are acting as Bidfair’s legal advisers. (Editing by Christopher Mangham)

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