The Strategist

Will Bezos' divorce affect Amazon?

01/16/2019 - 11:51

Divorce of the richest couple in the world is not an event that investors can miss. Can the already highly acclaimed split ultimately affect shares of the e-commerce giant, which is currently the most valuable publicly traded company in the world?

Seattle City Council
Seattle City Council
Amazon investors don't seem to be too concerned about the news that Amazon CEO Jeff Bezos and his wife Mackenzie are planning to divorce. Despite the widespread coverage of all sorts of judgments about what this may mean for Amazon, nothing significant has happened since the news were announced.

There has already been a precedent. The most expensive divorce in US history is a case of Steve Wynn, who left his former wife $ 1 billion in 2010.

Steve Wynn, the founder of Wynn Resorts, broke up with his wife Elaine in 2010 (for the second time). The process had dragged on for many years of legal battles and became a headache for investors wondering what would happen to shares of the Wynns.

As a result, Elaine received 10,076,709 shares or half of the joint share that the spouses owned during the marriage. The securities were then valued at $ 740 million. Steve’s share eventually fell sharply to 8.03%.

According to the shareholders' agreement, however, it was determined that the couple would continue to vote with the other largest shareholder, Aruze USA Inc. The Wynns were also restricted with regard to sale of their shares, and Elaine was completely forbidden to sell shares without permission of her ex-husband.

In the end, shareholders expelled Elaine Wynn from the Wynn Resorts board, deciding that the unpleasant divorce was a conflict of interest regarding its impact on the company.

Although the divorce and subsequent legal battles were only one of many factors affecting investors' opinions about the Wynns at that time, it is worth noting that the company's shares more than tripled in price from 2010 to early 2014, before falling sharply and drop to about $ 57 at the beginning of 2016.

Elaine Wynn sued her ex-husband in 2016 with the goal of regaining full control over her share. But it was not until February 2018 that Steve Wynn officially abandoned the struggle to retain the right to vote on his ex-wife’s shares. Shortly before that, Wynn resigned as CEO due to allegations of sexual harassment by an employee.

Steve Wynn cashed his shares at Wynn Resorts in May 2018, and Elaine still owns 8.77% of the company's shares, according to FactSet.

In the case of Jeff Bezos and Amazon, much more is at stake. Bezos owns about 16% of Amazon shares and about $ 137 billion beyond that. The spouses do not have a marriage contract, which could hypothetically give Mackenzie Bezos the right to half of the marital status.

Scott Altman, a professor at the USC Gould School of Law specializing in family law, notes that in most such divorces, shares are usually transferred to one party without tax consequences.

In addition, it is reported that Mackenzie will not take on obligations to shareholders of Amazon, because she believes that Jeff should fully control the company’s affairs. Mrs. Bezos herself will continue to develop her anti-bullying foundation in schools, which the couple founded together.