Judge upholds Sotheby's poison pill

|About: Sotheby's (BID)|By:, SA News Editor

A Delaware judge has rejected a request from Daniel Loeb's Third Point hedge fund to place a preliminary injunction on Sotheby's (BID) poison pill, which blocks Loeb and other activist investors from holding more than 10% of the auction house's stock but lets passive shareholders own up to 20%.

The ruling means that Sotheby's annual meeting can take place on Tuesday as planned, when Loeb will try to obtain three board seats.

The verdict has wider implications for other activist investors looking to build up powerful stakes in companies. While the poison pill has long been used as a corporate defense strategy, Sotheby's is different in that it specifically targets activists.