Magna to implement share plan, payout to Stronach
TORONTO (Reuters) - Magna International Inc said it will likely go ahead later on Tuesday with a plan to buy out founder Frank Stronach's controlling share block, collapsing the giant auto-parts maker's dual-class share structure.
The plan to pay Stronach about $1 billion in cash, common stock, and other benefits in return for his class B shares was announced in May. The board of Aurora, Ontario-based Magna said the move would unlock value in the company.
Late Monday, Ontario's Divisional Court upheld a lower court decision approving the buyout, and Magna said that dissenting shareholders did not plan to appeal the decision.
Around 75 percent of Magna's subordinate shareholders voted in favor of the plan in July and the Ontario Superior Court gave its approval earlier this month.
At least six institutional shareholders opposed the deal, including four major Canadian pension plans, which called the payoff to Stronach "unreasonable," and "fundamentally unfair" as well as setting a bad precedent.
Canada Pension Plan Investment Board, one of Canada's largest pension fund managers, said it was disappointed with the latest court ruling, but that it would not seek to appeal the decision.
"As an ongoing shareholder of Magna, we intend to engage with the company on its governance structure and practices under the revised ownership arrangement," it said in an e-mailed statement.
Magna said its common shares would trade on the Toronto Stock Exchange under the symbol MG, and would continue to trade on the New York Stock Exchange as MGA.
Shares of Magna were up 1.8 percent at C$81.07 on the Toronto Stock Exchange shortly after the market opened on Tuesday. The shares are up more than 26 percent since the deal was announced in May.
(Reporting by John McCrank; editing by Peter Galloway)
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