It is not everyday that one comes across a company whose shares tank following a divorce announcement. When the news of Amazon founder Jeff Bezos and his wife MacKenzie deciding to end their marriage of 25 years broke a couple of days ago, global media quickly ran to financial analysts and matrimonial lawyers to deduce how the divorce is going to impact the fortunes of Bezos, the world's richest person.
And, unsurprisingly, Amazon's shares seesawed on Thursday with investors wary about the future of Jeff Bezos's fortunes, especially Amazon that he founded in 1994, a year after he married MacKenzie. Questions on how the impending divorce would affect Bezos's control of one among the most valuable companies in the world are inevitable. Forbes lists Bezos as the world's richest person with an estimated assets worth $136.2 billion.
The couple's fortune includes about 16 per cent stake of Amazon's $811.4 billion market capitalisation.
The couple resides in Washington and if one goes by the divorce laws of the state, the property acquired after marriage is divided equally between the spouses. This would result in Jeff Bezos's fortunes being reduced to around $68 billion dollar, and topple him from being the world's wealthiest. And with the National Enquirer expose on Lauren Sanchez as "the third woman", Jeff Bezos's fortunes might further diminish if he decides to go for a settlement with her, assuming they end their relationship.
This means that Microsoft co-founder Bill Gates will once again become the richest man alive. Gates current fortune is worth $90 billion.
At the same time, an equal split would result in 48-year-old MacKenzie becoming the world's richest woman. Currently, Alice Walton, daughter of Walmart founder Sam Walton, is the world's richest woman with a fortune of $46 billion.
However, a different scenario would arise if the couple, who holds properties across the US, decides to file for the divorce in any state where it is not required to divide the marital property equally. "In that case a judge would likely determine MacKenzie Bezos's share of Amazon stock based on her contribution to her husband's success, which could include helping him make important business decisions or raising their children so he could focus on work," New York matrimonial lawyer Bernard Clair told Reuters.
This would mean that Jeff Bezos would have to sell or pledge his part of the shares in Amazon, which, in turn, could dilute his ownership and control of Amazon. Jeff Bezos owns 16 per cent stake in Amazon, worth about $130 billion.
Unlike other tech majors like Facebook and Google, Amazon does not give its founder greater voting rights based on shares. Hence, it is a no-brainer that if MacKenzie gets a large block of shares, she could have a big say at Amazon. If Jeff Bezos decides to sell the shares to MacKenzie, that would impact the power dynamics of the company built on the former's outsized influence on Amazon's value. "He is given control of the company because shareholders like him and his vision, not because he has 50 per cent of the stock," Reuters quoted Michael Pachter, an analyst at Los Angeles-based Wedbush Securities, as saying.
However, this is highly unlikely to happen, according to analysts.
Anyway, the divorce settlement is being closely watched and will prove to be the costliest separation till date. Billionaire and casino tycoon Steve Wynn's divorce from ex-wife Elaine Wynn in 2010 has been touted as the most expensive split till date. Elaine walked away with stock valued at $955 million.
As Shakespeare said, all's well that ends well.