Analysis of the Week: Enemies at the Gates: Bill and Melinda Announce Divorce​


​
By Alison Catchpole​


The Story

“Bill and Melinda Gates are divorcing,” American TV writer Gary Janetti posted on Instagram on 3 May 2021. “She gets California”.

Bill and Melinda have a joint estimated worth of $130.4 billion (Forbes). Married for 27 years and citing “irretrievably broken" on the divorce petition, the couple reportedly signed a Washington State Law ‘separation contract’ outlining how their estate would be split, and filed for divorce in a Seattle court. “We no longer believe we can grow together as a couple in the next phase of our lives,” read the statement issued on each of their Twitter accounts. They are thought not to have a prenuptial agreement and the content of the separation contract remains uncontested and undisclosed (Financial Times).

Bill’s investment vehicle Cascade Investment transferred various assets to Melinda on the day of the announcement. SEC filings recorded nearly $2.4 billion in securities, including 2.94 million shares of AutoNation and 14.1 million shares of Canadian National Railway Co, worth $309 million and $1.5 billion respectively (Bloomberg). Melinda also recently received 25.8 million shares of Mexico-based Coca-Cola Femsa worth $120 million, and 155.4 million shares of Mexican broadcaster Grupo Televisa SA worth $386 million (Wall Street Journal).

The Background

According to TMZ, “Bill and Melinda began dating in 1987 after meeting at a New York trade show, and she'd go on to work in marketing for Microsoft and be appointed as General Manager of Information Products in the early '90s.” In a 2019 Netflix documentary, Melinda describes finding Bill writing a whiteboard list of the pros and cons of getting married, which led to a 1994 Hawaii wedding. According to the Wall Street Journal, in 2019 Melinda also began discussions with divorce lawyers, around the time her husband’s ties to convicted sex offender Jeffrey Epstein became public.

Bill Gates co-founded Microsoft in 1975, though he now holds less than 1% and stepped down from the board in 2020 to focus on philanthropy. Forbes now lists Gates as the world’s fourth-richest person, after Jeff Bezos, Elon Musk and Bernard Arnault. In 2010, Gates and Warren Buffet founded The Giving Pledge, a philanthropic campaign encouraging extremely wealthy people to donate a majority of their wealth to charity. ‘Philanthrocapitalism’ is not uncommon in the USA – where it is tax-deductible – though it has been criticised as promoting private funding over government support for social and health networks (The Guardian). Nevertheless, as of 2021 there are 221 ‘pledgers’ (GivingPledge.org), many of whom are billionaires.

Apart from her work with the Bill & Melinda Gates Foundation, Melinda founded Pivotal Ventures, an investment company focused on women and families, in 2015. If she receives the 50% of the assets expected under Washington State law, Melinda will become the second richest woman in the world behind 67-year-old L’Oréal heiress Françoise Bettancourt Meyers.

Impact on Businesses and Law Firms

Forbes suggests three potential ways that a divorce can impact a business: the disruption of day-to-day operations, the potential impact on business partners and employees, or the dissolution of the business altogether. The Gates’ approach has been carefully engineered to minimise negative press and the impact on their shared business interests.

The Gates’ Foundation, established in 2000, employs 1600 people, and is the world’s largest philanthropic foundation, having given away $50 billion. The Gates’ Foundation mission statement revolves around an ethos of “non-profit, fighting poverty, disease and inequity around the world.” The pair have said the foundation’s work would not be affected by their change in marital status, though there are questions around its future governance, particularly as ‘Bill Projects’ and ‘Melinda Projects’ have previously diverged (Financial Times).

Melinda has three lawyers, including Robert Cohen, who has previously worked for clients such as Ivana Trump, Michael Bloomberg and Chris Rock (BBC). Bill has hired three Los Angeles-based lawyers, of firms Ted D Billbe PLLC, Stoel Rives LLP and Munger Tolles & Olson LLP. The teams will be tasked with dividing assets including interests in Four Seasons Holdings Inc (hotels), waste disposal company Republic Services, a rare Da Vinci notebook, multiple properties, and an estimated 242,000 acres from Louisiana to Arizona (Wall Street Journal). "We ask for space and privacy for our family as we begin to navigate this new life" said the Twitter announcement, though space may be something they find they already have.

Image Credit: VDB Photos/Shutterstock.com