Dan Loeb is seeing red.
The bad-boy billionaire investor, who holds a 9.62 percent stake in Sotheby’s, sued the auction house on Tuesday to overturn its poison pill and help him gain seats on its board.
Sotheby’s last fall limited any investor’s stake to 10 percent.
In late February, Loeb, founder of the $14 billion Third Point hedge fund, returned fire by promising to wage a proxy battle to gain three seats on Sotheby’s board.
Now, Loeb is applying more heat.
“The 10 percent trigger illegitimately tilts the playing field in the board’s favor and interferes inequitably with Third Point’s right as a major stockholder to wage a proxy contest,” Loeb said in the lawsuit filed in Delaware Chancery Court.
Sotheby’s board denied Loeb’s request to increase Third Point’s ownership to 20 percent on March 21.
Sotheby’s annual meeting will be held on May 6.
The lawsuit, and impending proxy contest, come as Sotheby’s stock has fallen 19 percent this year, closing Tuesday at $43.07, up slightly but almost $1 below Loeb’s average cost of $43.92. With dividends, Loeb is in the black.
Sotheby’s poison pill “is designed to limit the ability of any person or group to seize control of the company without appropriately compensating all Sotheby’s shareholders,” the auction house said Tuesday.
Sotheby’s has made some shareholder-friendly moves in recent months, including a $300 million special dividend.
The suit is considered a long shot, sources said.
Research firm Williams Capital has a sell on the stock and predicts the share price will fall further.