Magna, featuring a dual share structure divided between stockholders and the Stronach family, would purchase, according to a deal announced today, the Class B stock which gives Stronach 66 percent of voting rights in the company (each Class B share carries 300 votes). Stronach would receive in turn $863 million in cash and Class A shares, while the Class B shares will be cancelled.
"We believe the proposed transaction, if approved by shareholders, has the potential to unlock significant share value for Magna shareholders and establish a strong foundation for the company's continued and long-term success," Don Walker and Siegfried Wolf, Co-Chief Executive Officers of Magna said in a release yesterday.
"The proposed transaction is intended to reduce or eliminate the discount at which Magna currently trades relative to its peers, more closely align all shareholder interests, and enhance Magna's potential business opportunity for the electrification of future vehicles."
Stronach giving up control means, for most analysts, a great opportunity for Magna.
“It’s called ‘the Frank factor,’ and that’s one of the reasons Magna doesn’t get the value it deserves,” Dennis DesRosiers of DesRosiers Automotive Consultants told Bloomberg. “The equity markets don’t like the control the family has and he has a proven history of hairbrained ideas.”
The shares of the company skyrocketed 23 per cent on the Toronto Stock Exchange, a 20 year high for the company, according to Montreal Gazette.
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