Speculation about the future of Butterfields as a component of online auction giant eBay was put to rest Thursday with the announcement of the sale of the high-end auction house to privately-owned Bonhams, a British fine-arts auction house. The agreement includes the purchase of 100% of Butterfields' stock, including Butterfields traditional auction business and certain real estate occupied by Butterfields in San Francisco and Los Angeles. Terms of the sale have yet to be disclosed, but analysts believe the price was a considerable discount over the original $260 million in stock which eBay paid for the auction house. This marks the first time eBay has sold any of its businesses.
eBay's original strategy in purchasing the then Butterfield & Butterfield in 1999 was to expand its reach into the online sale of fine and decorative art and collectibles. But all the top fine-art auction houses had trouble making the transition to the online world, including Butterfields, Sotheby's and Christies. In January, Sotheby's entered into an online deal with eBay, which now hosts the Sothebys.com Web site.
The sale of Butterfields is the third pull back for eBay so far this year. In February they announced they were leaving the Japanese market to rival Yahoo and other more popular competitors. In July, eBay announced it would phase out its online-payment service Billpoint with the acquisition of competitor PayPal, the largest online payment service, by year-end.
The acquisition of Butterfields will allow Bonhams, established in 1793 in London, to expand its foothold in the North American market. Butterfields was founded in San Francisco in 1865. "With almost 20 separate areas of collecting covered by Butterfields sales, none of which is duplicated by our existing operations in North America, our acquisition of the company gives Bonhams a great base from which to build our business," said Robert Brooks, the Group Chairman of Bonhams.
The sale of Butterfields to Bonham closed on July 31, 2002. The sale to Bonhams of certain real estate is expected to close in the fourth quarter.
