AOL investment opens door to Amazon acquisition

Under terms of an agreement to invest US$100 million in Amazon.com, America Online Inc. is allowed to make a friendly bid to acquire the Seattle, Washington-based online retailer if it so desires, according to documents filed with the U.S. Securities and Exchange Commission.

While the agreement prevents AOL from making a bid to acquire management control or ownership of Amazon.com over the next two years, it contains a clause that would permit a friendly bid to move forward. The clause prohibits AOL from going ahead with an acquisition or making a public announcement of its acquisition plans without the approval of Amazon.com's board of directors.

AOL has invested $100 million in Amazon.com as part of an expanded marketing pact between the online retailer and the Internet service provider. The two companies plan to jointly develop online shopping services that will be rolled out in time for the year-end shopping season in 2002, the statement said. In addition, AOL and Amazon.com will collaborate on the development of other e-commerce initiatives, including customer authentication and wallet services. In return, Amazon.com will promote AOL as its exclusive ISP (Internet service provider) marketing partner and will make AOL software available for download from the Amazon.com Web site, the statement said. The online retailer will also offer AOL service subscriptions alongside products and services from AOL's parent company, AOL Time Warner Inc., on its Web site, the statement added.

The agreement will be expanded internationally, the two companies said.

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