NEW YORK (Reuters) – Shares of Amazon.com (AMZN.O) tumbled on Thursday as investors pondered the impact of imminent divorce from company founder Jeff Bezos on Wall Street's most profitable company and its ambitious expansion plans.
Bezos, whom Forbes considers the richest person in the world, worth an estimated $ 136.2 billion, announced via Twitter Wednesday that his wife and wife MacKenzie, 25, will divorce. Amazon shares lost 0.5% in the afternoon on Thursday, after winning earlier in the session.
The split casts doubt on how the couple will divide their fortunes, which includes a stake of about 16% in Amazon's approximately $ 811.4 billion market capitalization. The divorce laws in the state of Washington, where they live, state that property acquired during a marriage is usually divided equally between the spouses.
Most analysts and fund managers are largely optimistic that divorce will not result in any significant change in the company's leadership or growth prospects.
Doug Kass, a prominent short seller, who manages the Seabreeze Partners hedge fund, said he had sold his stake in Amazon at the announcement of the divorce. It was after initially buying a stake in late December and having named Amazon among its "list of best ideas".
"Is it premature to ask what happens to Amazon when Jeff Bezos chooses to take over the day-to-day management of the company that he founded?", He said. "His announced divorce gives me pause for reflection."
The couple has multiple residences across the country, so it is possible that the divorce is filed in a state where marital property is not presumed divided equally.
New York's marriage lawyer, Bernard Clair, said that in this case, a judge would likely determine MacKenzie Bezos' share in Amazon's shares based on her contribution to her husband's success, which could include helping him make important business decisions or raising their children so that he can focus on the job. .
Any transfer of the shares of Jeff Bezos would be subject to the disclosure requirements of the US Securities and Exchange Commission. As an officer and director of the Company, Bezos may be required to file an SEC Form 4 within two business days of any transfer, although former SEC solicitor Broc Romanek pointed out that a provision of US securities legislation exempts transfers of shares made in accordance with a national ordinance. .
Even if Bezos was exempted from filing a Form 4, he would be required to promptly update the record of his holdings of Amazon with the SEC if his position in the company changed by at least 1%, said litigation attorney DC Thomas Gorman. MacKenzie Bezos would also need to file a similar record if she received more than 5% of Amazon's stock.
Peter Henning, a professor of securities law at Wayne State University, said that Amazon, unlike other tech giants such as Facebook Inc. (FB.O) and Google Inc. (GOOGL.O ), does not give greater voting rights to its shares. If MacKenzie Bezos is given a large block of shares, she could play an important role in society.
Gorman agreed. "She could end up with some sort of control block and get herself a director position," he said. "It depends on what she wants to do."
Any effort to dilute MacKenzie Bezos's voting rights by creating a separate class of shares would require a shareholder vote, Gorman said, although he felt that such a decision was unlikely.
"Nobody wants to divorce through a meeting of shareholders," he said.
Robert Bacarella, portfolio manager of the Monetta fund, said that, even if he did not change his investment in Amazon, he expected other growth-oriented portfolio managers to reduce their holdings because of the concerns. related to the impact of divorce.
"It's a society that is so overexploited and it gives them an excuse to say," Maybe I'm going to reduce some because it adds a new question mark, "he said.
Bacarella, however, said he was not worried because even though MacKenzie Bezos had sold a stake of up to 8%, the sale would have no basic reason. Any impact would be short-term in nature.
"Unless you are concerned that he is so distracted by the divorce that he can not run the company, it will be a non-event," said Michael Pachter. analyst at Wedbush Securities in Los Angeles. "He is given control of the company because the shareholders love him and his vision, not because he owns 50% of the shares."
Thomas Forte, an analyst at D.A. Davidson, said the questions about the future of the company because of the divorce were legitimate because of Jeff Bezos' disproportionate influence on his value. If he left the company for whatever reason, his shares would fall by more than 10% immediately, he said.
"His influence on the company is as important as if he owned shares with excessive voting rights because of his background and the way he runs the company as if he owned all of it," he said. declared.
Report by David Randall and Jan Wolfe; edited by Anthony Lin and Dan Grebler