Amazon founder Jeff Bezos’ divorce may affect his stake in the firm

Almost 95.0% of Mr Bezos’ net worth is tied to the e-commerce colossus, so the lawyers handling the divorce would need to find a workaround solution on the division of assets.

Founder, chairman, and chief executive of Amazon Jeff Bezos Source: Bloomberg

Just days after Amazon became Wall Street’s most valuable company, surpassing Microsoft, another round of Amazon news came to surprise investors: Amazon’s founder and chief executive Jeff Bezos and his wife MacKenzie Bezos will be divorcing after 25 years of marriage, the couple said in a post on Twitter on Wednesday.

Mr Bezos, 54, is currently the world’s richest man, with a fortune of US$160 billion due to his 16.3% stake in multi-billion dollar tech firm Amazon.

Almost 95.0% of Mr Bezos’ net worth is tied to the e-commerce colossus, so the performance of Amazon’s stock has a direct and significant impact on his wealth. And because his net worth is tied to his stake in the firm, the divorce which would usually lead to a division of assets between the duo, may see changes on Mr Bezos’ stake in the firm.

Mr Bezos had met his wife before he founded Amazon. The two were engaged after three months of dating and married three months afterwards, according to a Vogue article. The couple has four children. It is likely for the duo to settle their divorce privately.

Mixed views on Bezos’ ownership in Amazon post-divorce

Analysts were mixed in their views on how the impact on the divorce could potentially change the stake Mr Bezos has in Amazon. Some said the divorce should have no material impact on the company and its shares, while others view that the ownership in Amazon could change.

It may be difficult for the Bezos to split up their wealth without dipping significantly into their Amazon shares, said Jordan Neyland, an assistant professor of law at George Mason University, in a CNBC report.

The likely scenario could be a buyout of Mrs Bezos shares or for her to retain the shares. Otherwise, another likely option would see Mrs Bezos keeping the stock and Mr Bezos retaining the voting rights.

It is likely for Mr Bezos to find a way to retain voting power in Amazon, and he would need to find a structure or may have already come to an agreement with his spouse prior to the twitter announcement.

If the couple decides to file for divorce in Washington state, where Amazon is headquartered, the state law says the assets accumulated throughout the course of the 25-year long marriage would be owned by them both. Only if the two has a prenuptial agreement, then the assets would not be equitably divided.

Amazon’s stock has risen more than 40.0% year-to-date, trading at US$1,169.47 on December 29, 2017.

Amazon’s shares shrank 0.33% or US$5.42 in afterhours trading, to US$1,654.00, at 10.51pm New York time.

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