Court OKs billion-dollar payout to Magna founder
By Pav Jordan
TORONTO (Reuters) - A Canadian court on Tuesday approved a plan by Magna International to pay founder Frank Stronach close to a billion dollars in exchange for giving up control of the auto parts giant he started from scratch as a young Austrian immigrant in Canada.
The ruling paves the way for Magna to end the dual-class share structure that had left control of the company in the hands of its founder, who came to Canada when he was 21 with only a couple of hundred dollars in his pocket.
Shares in the company rose 5.14 percent to C$83.62 in Toronto after the court decision was announced. That is a 30 percent rise over the C$64.27 per share value on May 5, the day before Stronach announced plans to release his grip on the world's No. 3 auto parts maker.
"The Ontario Superior Court has approved the previously announced plan of arrangement to eliminate Magna's dual-class share structure," Magna said in a statement to the media.
Stronach will get $863 million worth of stock under the deal, which will see the 77-year-old entrepreneur give up his controlling, class B shares in return for 7.5 percent of the company's class A shares.
He also gets $300 million in cash, control of a new electric car-parts joint venture between Stronach and Magna, and four years of lucrative consulting fees.
"By voting the new Magna shareholder structure into place, shareholders are seeking greater control and have essentially given management their vote of confidence," UBS analyst Tasneem Azim told Reuters.
"It will now be up to management to deliver under its new structure -- shareholders will have greater power to take Magna to task if it doesn't." Continued...