Sotheby's spent $20 million to wage war against Dan Loeb

Daniel Loeb
David A. Grogan | CNBC (L) | Mike Clark | Getty Images (R)

Sotheby's battle and reconciliation with activist investor Dan Loeb was more expensive than previously disclosed.

The auction company said during a conference call last week that took a special charge of $20.1 million in the first nine months of 2014 for fees associated with its defensive campaign against Loeb, founder of hedge fund Third Point. That equals nearly half of Sotheby's net income for during that period.

In May, Sotheby's put the cost at $15.7 million.

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Sotheby's said the fees were for "third-party advisory, legal and other professional service fees directly associated with issues related to the shareholder activism and the resulting proxy contest with Third Point and the associated litigation."

Of that amount, $10 million will be paid to Loeb to reimburse him for his expenses.

Loeb launched a scathing activist campaign against Sotheby's last year, likening the company to an "old master painting in need of restoration" and calling for the ouster of CEO William Ruprecht.

Sotheby's and Loeb reached an agreement in May, with Loeb's Third Point getting three board seats.

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So has the $20 million been worth it?

Loeb has certainly done well, getting reimbursed for his battle and getting three board seats in the deal.

Yet shareholders have less reason to celebrate. Sotheby's shares are down 12 percent since the day Loeb's stake was disclosed in August 2013, and 10 percent since Loeb's May announcement that he was joining the board.

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The decline comes amid one of the strongest art markets in history, with Sotheby's reaching its highest total ever— $422 million—for its Impressionist and modern auction last week. Both Sotheby's and Christie's will hold their post-War and contemporary evening sales this week.

But investors may see better times ahead. Despite the latest disclosure, Sotheby's shares were trading higher Monday morning on its narrowed third-quarter loss and its strong forecast.