Frank Stronach, chairman of Canadian auto parts giant Magna International, has agreed to release control of the company he built up.
Stronach, 77, arrived in Canada as an immigrant from Austria 50 years ago with just US$200 in his pocket. He built Magna up from what was originally a Toronto tool and die shop.
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The company said he would reduce his family’s voting rights from 66% to 7.44% in a deal valued at US$863m.
Stronach said in a statement: “While I am content to maintain the status quo, I understand the potential benefits of management’s proposal, particularly the opportunity to establish a strong foundation for the future.”
The company said the deal was aimed at boosting Magna’s share price – which immediately jumped 16% percent after the proposal. The company has also just announced better-than-expected quarterly results.
Under the deal, the Stronach family trust will swap its 726,829 Class B shares, each carrying 300 votes, for pm newly issued Class A shares and US$300m in cash. Magna would be left with a total of 121m shares outstanding, each carrying one vote.
Under the new ownership structure, Stronach will continue to serve as chairman, but resign as a member of the board’s nominating committee and face the same election process as other directors.
He will also see a gradual cut in consulting fees from 3% of Magna’s pre-tax profits before profit sharing, to 2% by 2014.
