SEATTLE --AOL Time Warner would be allowed to propose a takeover bid for Amazon.com--as long as it did so quietly --under the terms of a $100 million investment AOL made in Amazon Monday.
According to records filed with the Securities and Exchange Commission, and reported by Dow Jones Newswires, AOL could propose a buyout, but not publicly and not without the approval of Amazon.com.
Amazon.com spokeswoman Patty Smith would not comment beyond to say that the company entered into a "modest and appropriate standstill agreement" with AOL. A standstill agreement typically restrains companies from buying shares in other companies for a specified period of time.
According to the filing, AOL and its affiliates also agreed to hold onto its stake in Amazon _ which accounts for about 2 percent of the company --for at least two years.
The company also said it wouldn't acquire more than 5 percent of the company, or seek to negotiate a merger or acquisition, without a prior agreement between the two.
That agreement would also end if another company made an unsolicited bid for Amazon, or if Amazon publicly sought bids for a takeover.
Amazon and AOL announced the $100 million investment, for at least 6,543,646 shares of common stock, as the two companies announced a strategic alliance Monday.
Under the multiyear agreement, AOL will use Amazon's electronic commerce technology to create a Web store for AOL's 30 million customers, and will receive an unspecified payment for the efforts. The store is expected to launch in time for the 2002 holiday season.
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