Sunday, January 1, 2012


Noortman posts a loss after failing to hit Sotheby’s targets
Old Master specialist opens London space and shifts selling strategy to include modern and contemporary

By Charlotte Burns and Gareth Harris. Market, Issue 230, December 2011
Published online: 05 December 2011

There are changes afoot at Dutch Old Master dealer Noortman. The company has recently expanded into London with a new space at Old Bond Street, and is shifting its sales strategy after suffering an $8.3m loss on its inventory.

The details have emerged on the fifth anniversary of the company’s acquisition by Sotheby’s in 2006 for $82m, and the expiry of financial performance ¬targets set as part of the initial ¬purchase. In 2006, Sotheby’s paid $56.5m of the total $82m purchase price in company shares (1,946,849 shares at a rate of $29.01 each). This gave Noort¬man a 3.2% stake in Sotheby’s. It is unclear how much of the stock the gallery now owns because the information is not reported in Sotheby’s Securities and Ex¬change Com¬mission filings.

However, Noortman has not achieved the “minimum level of financial performance”, according to Sotheby’s third-quarter filing, which states that, under the terms of the original deal, “up to 20% of the initial consideration would be transferred back to Sotheby’s” if the dealership failed to reach the agreed objectives. Following the five-year ¬review, the gallery has to transfer 147,352 shares back to Sotheby’s in the fourth quarter of 2011 (7.5% of the original amount).

The $8.3m write-down relates to Sotheby’s reassessment of the gallery’s stock. “It is standard accounting practice. You determine that the assets are not as much as you thought and revalue downward. Sotheby’s is saying ‘We still have these paintings, they are not [worth] as much as we thought, so we are putting a new value on them,’” says Eric Hollowaty, an equity research analyst at Stephens investment bank.

Noortman will sell off a “large collection of lower valued works at various auction houses in the fourth quarter of 2011”, according to the filing. Sotheby’s itself is not selling the bulk of the work. “It’s not all the sort of material we handle, it’s not our brief and it’s not what we do best,” says chief executive Bill Ruprecht.

The gallery, which has traditionally specialised in Dutch and Flemish Old Master paintings, as well as French impressionist and post-impressionist works, is now changing its remit. “We will be interested in all objects ranging through the entire spectrum of what is loosely classified as ‘Old Masters’, through to the first half of the 20th century, and possibly even some classic contemporary,” says Anthony Crichton-Stuart, director of Noortman Master Paintings in London.

The move makes sense in the current climate, say many in the trade. “High-end art is seen as a haven and a lot of collecting today is for investment,” says London dealer Martin Summers.

Despite the heavy losses, the gallery is expanding in London and recently opened a new space in Old Bond Street. “It’s both an office and gallery as well as being an adjunct to our Amsterdam location,” says Crichton-Stuart.

Nonetheless, some in the trade are speculating about the future of the gallery’s Amsterdam space. Sotheby’s filing details $4.5m in the year-to-date in restructuring charges related to its plan to streamline European selling spaces in Italy and the Netherlands. It is unclear whether this will involve cutting back on Noortman’s operations in the Netherlands. Fuelling the rumours is the fact that the gallery director William Noortman is spending increasing amounts of time in London. But a Sotheby’s spokes¬woman says: “Amsterdam remains the principal base for Noortman Master Paintings.”

William Noortman took over the business, aged 25, after his father Robert Noortman’s death in 2007. In a business reliant on personal relations, this may have had an impact. “My understanding from talking to Sotheby’s management is that Robert Noortman was very instrumental personally in driving the success of the gallery. When you lose someone pivotal like that, it has an effect,” says Hollowaty. “When Robert was alive it was more his deal than his son’s. If some of the principles in a deal pass on, it leaves quite a different atmosphere afterwards,” says Summers. “But William is very good, and I wish him all the best.”

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