Following some intense months of negotiations and rhetoric, Magna's proposed plan to eliminate the current dual class share structure and subsequently put an end to the control founder Frank Stronach has over the company was approved this week by the Ontario Superior Court.
The plan was approved by the court after the shareholders gave their thumbs up at a special meeting in Toronto last month. Although some were arguing Stronach will be paid excessively for his part of the company, the court found the arrangement to be “fair and reasonable.“
Until now, Magna operated under a dual share structure divided between stockholders and the Stronach family. Stronach owned so called Class B stock which gave the founder 66 percent of voting rights in the company (each Class B share carries 300 votes).
Magna plans to pay the founder $863 million in cash and Class A shares (or a total compensation worth $984 million), while the Class B shares will be canceled.
"Today's decision by the Superior Court affirms our position that the claims of the dissident minority shareholders are without merit," said Vincent J. Galifi, Magna CFO. "We believe that our shareholders, who by a large majority voted to support the proposed transaction, will be very pleased that the Court respected and upheld their vote."
On the other hand, the Canada Pension Plan Investment Board still opposes the deal, despite the court's ruling. The group plans to file an appeal. According to Magna, such a move is to be expected.
“It is unknown whether certain dissident minority shareholders of Magna intend to appeal the decision. Ordinarily, an appeal must be filed with the Ontario Superior Court within 30 days of the court decision,” the supplier says in a statement.
The plan was approved by the court after the shareholders gave their thumbs up at a special meeting in Toronto last month. Although some were arguing Stronach will be paid excessively for his part of the company, the court found the arrangement to be “fair and reasonable.“
Until now, Magna operated under a dual share structure divided between stockholders and the Stronach family. Stronach owned so called Class B stock which gave the founder 66 percent of voting rights in the company (each Class B share carries 300 votes).
Magna plans to pay the founder $863 million in cash and Class A shares (or a total compensation worth $984 million), while the Class B shares will be canceled.
"Today's decision by the Superior Court affirms our position that the claims of the dissident minority shareholders are without merit," said Vincent J. Galifi, Magna CFO. "We believe that our shareholders, who by a large majority voted to support the proposed transaction, will be very pleased that the Court respected and upheld their vote."
On the other hand, the Canada Pension Plan Investment Board still opposes the deal, despite the court's ruling. The group plans to file an appeal. According to Magna, such a move is to be expected.
“It is unknown whether certain dissident minority shareholders of Magna intend to appeal the decision. Ordinarily, an appeal must be filed with the Ontario Superior Court within 30 days of the court decision,” the supplier says in a statement.