Recently, Amway Corp. announced plans to take Amway Asia Pacific and Amway Japan Ltd. private. Amway Japan Ltd. (AJL) was down 25.3% for fiscal 1999, with a 3.9% decline in distributor numbers and "significantly" lower recruitment; Amway Asia Pacific (AAP) saw a 14.7% decrease for fiscal 1999 with a corresponding decline in distributor numbers, from 646,000 to 601,000. Added to Amway Corp.'s decline of 12% in North America, and it's been a bad year.

The company blamed "negative publicity" for the decline in Japan. Some of this "negative publicity" included an October, 1999 trouncing in court when Amway tried to block sales of a book which claimed that Amway resembles a pyramid scheme. According to a Bloomberg news report,

"The court rejected Amway's claim, saying there are reasons to believe that the company's business resembles a situation in which newcomers to the company in effect finance the benefits reaped by earlier salespeople."

On November 15, 1999, the company announced plans to take AJL private, with a stock buyout by the "principal shareholders" of all outstanding common stock.

"The principal shareholders of Amway Japan are certain corporations, trusts, foundations and other entities formed by or for the benefit of the Van Andel and DeVos families. . ."

According to Dick DeVos, President of Amway Corp.,

"The acquisition of Amway Japan's shares will give us the flexibility we need to streamline operations and to integrate certain functions of all Amway companies under a single global corporate structure."

At the same time, a similar announcement was made about the DeVos and Van Andel families' plans to take AAP private. AAP is the exclusive distribution vehicle for Amway Corporation in Australia, Brunei, People's Republic of China, Macau, Malaysia, New Zealand, Taiwan and Thailand.

Class Action lawsuits have now been filed in California against both AAP and AJL, and in New York against AAP. Both California complaints allege that the purchase price offered to Amway Asia Pacific's public shareholders in the tender offer is unfair and alleges self-dealing and breaches of fiduciary duty. The lawsuit seeks injunctive relief or, alternatively, rescission, unspecified damages, costs and attorneys' fees and other relief. The company denies the allegations.

The New York suit alleges that the November 18 tender offers violated federal securities laws, and were materially false and misleading. According to the suit, the buyback plan, -- announced just hours before the WTO took significant action in admitting China -- fails to account for the impact on business in China. The suit seeks to recover damages for all class members, excepting the defendants.

The question remains, however, what do the DeVos and Van Andel families hope to gain by privatizing AAP and AJL? The obvious conclusion is, it will save them the embarassment of having to report publicly about sliding sales and diminishing distributor numbers. A privately owned company is under no obligation to make these embarassments public: a stockholder-owned company is forced to. A private company can concoct whatever sets of information -- or misinformation -- it wants to: a public company must make audited reports available to its owners/stockholders.