SEATTLE--Amazon.com Inc.'s deal to accept a $100 million investment from America Online allows the AOL Time Warner Inc. unit to propose purchasing the Internet retailer, according to a federal filing.
On Monday, Amazon said it sold $100 million of its shares to America Online as part of a broad strategic alliance. Under the five-year agreement, Amazon will provide technology such as product comparisons and search capabilities to America Online users. In turn, Amazon will promote America Online exclusively as an Internet-services provider.
The investment agreement, filed with the Securities and Exchange Commission, lets America Online propose a takeover if America Online treats the proposal as confidential and doesn't disclose it publicly without Amazon's approval. If Amazon makes a public statement about any proposal, America Online will be released from its confidentiality agreement, according to the investment agreement.
The agreement bars America Online and other affiliates from acquiring a stake larger than 5 percent in Amazon. It also prohibits the unit of AOL, a New York entertainment conglomerate, from soliciting proxies or seeking representatives on Amazon's board. The restrictions apply for two years.
Restrictions on America Online wouldn't apply if Amazon accepts a merger proposal or receives an unsolicited merger offer that it didn't reject publicly, according to the filing.
America Online didn't return a phone call seeking comment. An Amazon spokeswoman said, "Given the amount of the AOL investment in Amazon, which is about 1.5 percent to 2 percent of the company, we felt the terms were appropriate for an arrangement of this size."