MORE AUCTION SCRAMMBLING

THE prestigious international auction house Sotheby's has sold its Australian arm to a rival company headed by Sydney businessman and auctioneer Tim Goodman.

The Australian art market was reeling at the news, but the most shocked of all were Sotheby's Australian staff, who were told of the takeover only yesterday. The Age understands they were gutted by the announcement. But Mr Goodman said they had nothing to fear.

Mr Goodman, as chairman, chief executive and shareholder of First East Auction Holdings Limited (FEAL), the company that has bought the Sotheby's licence, was instrumental to negotiations.

He would not reveal the amount paid for the licence, but The Age understands it could be as little as in the low millions. The transaction will be finalised later this year.

Mr Goodman is also the current chairman and chief executive of Bonhams & Goodman auction house, but he will be breaking ties with British firm Bonhams, terminating the licence to use the Bonhams' name on December 22.

In essence, he will be ditching the Bonhams brand in order to assume the distinguished mantle of Sotheby's.

Industry observers were stunned by the takeover.

Sotheby's has been struggling in the economic downturn, and its profit and share prices have plummeted. Its shares closed in New York on Friday at $US15.66, still far below the all-time high of $US57.64 in 2007. In the wake of falling profits and share prices, Sotheby's had been reviewing its operations around the world.

Last night, Bonhams chairman Robert Brooks announced that Bonhams 1793 - a shareholder in FEAL, which has traded as Bonhams & Goodman for six years - would launch its own independent operation in Australia and was looking to expand its presence here.