Christie's price surprises City

CITY analysts yesterday expressed surprise at the price paid for Christie's, the 232-year-old auction house which was sold to French billionaire Francois Pinault for pounds 721m.

The cash offer of 396p per share is at a 40 per cent premium to the closing price on 1 May, the last day of trading before Mr Pinault bought a 29 per cent stake in the auctioneer.

"It's a pretty full price and at these levels I can't see anyone else coming in," said Guy Bell at Beeson Gregory. "The business probably won't grow as quickly as it has. The Far East situation will take some demand out of the market and the lack of major single-owner sales is also a factor."

Mr Pinault's offer, which is being conducted through his private company Artemis, represents a huge premium to the offer tabled by a consortium of wealthy investors led by SBC Warburg earlier this year. That group, which included former Christie's shareholder Joe Lewis, was offering less than 300p per share. It was rejected by the board of Christie's.

Some analysts question whether Mr Pinault could make his acquisition pay at these levels. However, his representatives said Mr Pinault is a shrewd, long-term investor who expects to take advantage of the liberalisation of the French art market this summer, when European Union rules eliminate long-standing French laws that have protected the big French auction houses from competition at home.

It is understood that Mr Pinault will favour evolution over revolution at Christie's. It will still be run from London and New York and the board, led by chief executive Christopher Davidge, will be retained.

Mr Pinault's view is that in highly volatile markets such as art, earnings are too uncertain for a publicly quoted company. He wants to build the Christie's brand worldwide and secure the company against downturns in the art market.

Shareholders are still entitled to their 4p final dividend, announced in February. Christie's shares closed up 75p at 387.5p.

Outlook, page 25