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Butterfield Auction House Is Making a Bid to Go Public


Butterfield & Butterfield, the West Coast's oldest auction house, is hoping to pull an EBay with its first public stock offering, expected to be sold as early as this week.

Butterfield, however, has nowhere near the cyberspace presence as EBay, the online auction company that went public last year with an initial public offering that rose 163% on its first trading day, analysts said.

San Francisco-based Butterfield is the third-largest auction house, behind Sotheby's Holdings and Christie's International, in what is estimated as a $2-billion-a-year business.

Established in 1865, Butterfield conducts more than 100 auctions each year and has sold the estates of Liberace, Bing Crosby and William Randolph Hearst. With a reputation for high quality, Butterfield is featured on the show "Appraise It" on the Home & Garden Television network, known as HGTV.

In its filing, the company said it expects to raise about $14.6 million, giving it an estimated share price of $11.

In what analysts and potential investors see as a positive sign, Butterfield last week said it has signed a deal with San Jose-based EBay to begin offering items on the Internet. It has similar marketing agreements with Yahoo.

"This venerable name, which began as a resource for Gold Rush-era Californians, has apparently recognized the online auction business as a Gold Rush for themselves," said Gail Bronson, analyst with IPO Monitor, a Calabasas-based data firm.

EBay plans to bring antiques and fine art to its world of cyber-bidding, with the new category being listed on its home page sometime this quarter, EBay said last week.

In February, Butterfield began offering real-time access to its live auctions via the Internet. The firm expects to use $1 million of the proceeds from its IPO to boost its online business.

"It could be a good play," Bronson said. "Seems like anything on the Internet that is auction-related only bids up."

Kevin Pursglove, spokesman for EBay, said he could not comment on any alliance with Butterfield. EBay is in a "quiet period" because of a secondary offering of $6.5 million in common stock it plans to sell through Goldman, Sachs & Co.

Butterfield executives also could not comment because of its quiet period, a time limit imposed by the Securities and Exchange Commission that prohibits a company from touting its stock.

"I think Butterfield management is taking a savvy approach to combining the real world with the power of the Internet," said Vernon Keenan, an Internet analyst with Keenan Vision Inc. in San Francisco. "I have a positive view of their management and partnering strategy."

Although Butterfield's online capabilities may be underdeveloped, the company has a solid reputation, analysts said, noting that there have been problems with alleged fraud and phony antiques on EBay and other Internet auction sources.

"The thing that Butterfield--and especially Sotheby's and Christie's--have been great at is . . . having these expert appraisers," Keenan said. "The quality they represent will carry through to online sales."

Those sales could grow dramatically, Keenan said. In fact, he predicted that about 15% of the fine-arts auction industry will be on the Internet in five years.

Butterfield had $20.7 million in revenue last year, a slight increase from $20.2 million the year before. Net income fell 30% to $227,000 in 1998, from $328,000 the year before, mostly due to an asset sale that boosted earnings in 1997.

The company has 245 employees and galleries in San Francisco, Chicago and Los Angeles.

Bernard Osher, Butterfield's chairman and a co-founder of Golden West Financial Corp., will own 43.7% of the firm after the IPO, and Irving and Varda Rabin will still own about 30%.

Osher and Irving Rabin have been directors of the company since 1970. Rabin is chairman of Rabin Bros. Worldwide, another auction firm.

The lead underwriter on the deal is First Security Van Kasper, formed last year when Salt Lake City-based First Security Corp. agreed to purchase San Francisco investment bank Van Kasper for $100 million in stock.

Analysts cautioned that the firm has not been a big player in the IPO market in the last 15 months.

Times wire services were used in compiling this report.

Debora Vrana covers investment banking and the securities industry for The Times. She can be reached at or at Business Section, Los Angeles Times, Times Mirror Square, Los Angeles, CA 90053. Please note that initial public offerings are highly speculative and are unsuitable for many investors.

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