White Knight

Taubman goes after Sotheby 's

Though he is little known to the general public, Developer A. (for Adolph) Alfred Taubman, 59, is one of the wealthiest men in America. Over the past 33 years, he has amassed an empire that includes 25 major shopping centers in the U.S., 800 A & W fast-food outlets, 100 movie theaters and a personal fortune estimated at $525 million. Now Taubman, who operates out of Troy, Mich., is going after one of the most prestigious properties of all: Sotheby Parke Bernet Group, the tradition-laden British art auction house. Said Taubman in announcing his offer of at least $100 million in London: "This is like coming over here and buying the throne."

Until recently Taubman was a private man who shunned publicity, and he has not even been listed in Who's Who. But lately he has begun edging into view. He is bankrolling the Michigan Panthers, one of the entries in the infant U.S. Football League. In the business world, Taubman's real estate acumen is legendary. In 1977 he and some investors, including friends like New York Investment Banker Herbert Allen Sr. and Henry Ford II, outbid Mobil Corp. and paid $337 million for the Irvine Co., which owned 77,000 acres of mostly vacant land south of Los Angeles in Orange County. Six years later Taubman and his partners cashed in on the run-up in the housing market and sold the property for more than $1 billion. Said Taubman proudly: "This is a better deal than the Louisiana Purchase."

Ordinarily the 239-year-old Sotheby's would not be eager to be taken over by an American of any stripe, and particularly not by a real estate magnate like Taubman. Though trained as an architect at the University of Michigan and at the Lawrence Institute of Technology near Detroit, he emphasizes both commerce and art. Says he: "A shopping center is like a department store. First you plan where the merchandise is going to go, then you build architecture around it." That sort of attitude hardly seems suited to Sotheby's, where a cultivated image of exclusivity and taste is considered crucial for dealing with affluent art collectors.

But Sotheby's has been in deep trouble, brought on by sloppy management and overexpansion of its British and Manhattan auction houses during the heady late 1970s, when the auction business was booming. In its last fiscal year, Sotheby's lost $5.3 million on revenues of $92.2 million. Disturbed about the firm's shaky finances, owners have taken their artworks elsewhere to be sold. Late last year archrival Christie's (1982 revenues: $56.8 million) temporarily passed Sotheby's as the world's largest art auction house.

Sotheby's sees Taubman as a White Knight who will fend off an unfriendly takeover attempt by two other wealthy Americans, Marshall Cogan and Stephen Swid. Cogan and Swid head General Felt Industries, a New Jersey maker of carpet backing, and Knoll International, a manufacturer of office furniture. The two, both art collectors, acquired 29.9% of Sotheby's stock and announced that they wanted to buy the rest. Sotheby's was apoplectic. Chief Executive Graham Llewellyn threatened to "blow my brains out" if the bid succeeded, and Sotheby's staff of experts in London warned they would quit en masse.

Sotheby's views Taubman much more favorably. Says Llewellyn: "Chemistry plays an extremely important role in a people business. It did not exist in the previous bid, but it does in this one." Part of the reason for the warmer reception is Taubman's connections to the art world. He is on the board of New York City's Whitney Museum of American Art and is a trustee of the Michigan Foundation for the Arts. He is also an important collector of 20th century art, impressionist paintings and Chinese ceramics. His second wife, Judy, used to work for Christie's. Last month Taubman bought a Picasso crayon drawing at Sotheby's New York auction house for an undisclosed price.

So far, Cogan and Swid have not been scared off by their well-heeled opponent. Last week they upped their offer 21%, to around $114 million. Before a winner in this auction-house auction can be declared, the British Monopolies and Mergers Commission will examine both offers, a process that could take six months. Taubman has already purchased more than 10% of Sotheby's, and the commission is expected to scrutinize closely Cogan and Swid's financing. The prevailing opinion is that the canny operator who outmaneuvered Mobil in a real estate deal will be a tough match for two carpet merchants from New Jersey. This file is automatically generated by a robot program, so viewer discretion is required.