"Girl with Balloon" was auctioned off in London on October 5th for a little over one million pounds, or roughly 1.4 million dollars.
"In the process of "destroying" the artwork, a new one was created", Sotheby's said.
In a statement, the work's owner, who remains anonymous, said, "When the hammer came down last week and the work was shredded, I was at first shocked, but gradually I began to realize that I would end up with my own piece of art history".
Moments after the hammer fell at the auction on Friday, alarms sounded and the canvas dropped through a hidden shredder built into the bottom. The art world was in shock at the never-before-seen stunt, and experts soon began speculating that the piece was perhaps worth even more in its destroyed state.
Because it is only partially shredded, "it becomes something else, egged on by the social media buzz" and acquires the aura of "an iconic work of art", he said.
After a week of negotiations, the winning telephone bidder - which the auction house described in an Instagram post as a "long-standing client" who is a "female European collector" - is going through with her purchase at its original price.
Banksy's painting Girl with Red Balloon was shredded after its sale at a Sotheby's auction in London.
"Absolutely not", Sotheby's head of contemporary art in Europe Alex Branczik posted on Instagram.