Sotheby's acquires "Pink Star" diamond after buyer defaults
(Reuters) - Sotheby's said it acquired the "Pink Star" diamond, which had fetched a world-record price in November, after its buyer couldn't pay and defaulted.
New York-based diamond cutter Isaac Wolf outbid three rivals last November to pay 76.3 million Swiss francs ($83.02 million)for the flawless pink diamond in an auction guaranteed by Sotheby's.
In a post-earnings conference call, the auction house said it reversed the related commission revenue as a result of the buyer default and recorded the pink diamond in inventory at a value of about $72 million.
"We are currently in discussions with the buyer, while also considering other alternatives," Patrick McClymont, Sotheby's CFO said on the call with analysts. "In the meantime, we are quite comfortable with our valuation, and see real value in owning the diamond at this price."
The world-record price for the diamond, which had been renamed "The Pink Dream" after Wolf acquired it, had included a "buyer's premium," or commission fees. The diamond's pre-sale estimate was $61 million.
The 59.60-carat Pink Star was the main attraction at Sotheby's November jewels sale in Geneva, which was the highest jewelry sale total for a single auction in history - $199.5 million.
On Thursday, Sotheby's reported weaker-than-expected quarterly profit, hurt by higher operating expenses and increased competition. The auctioneer reported earnings of $1.30 per share that missed analysts' estimates of $1.40 per share, according to Thomson Reuters I/B/E/S.
Billionaire hedge fund manager Daniel Loeb mounted a proxy fight with the goal of winning three board seats after the auction house's promise to return $450 million to shareholders failed to appease activist investors.
(Reporting by Chris Peters in Bangalore; Editing by Supriya Kurane)
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