Magna founder Frank Stronach is selling 20% of the parts maker and contract vehicle developer and assembler to Russian billionaire Oleg Deripaska for $US1.5bn after an intense lobbying effort to win over shareholders unhappy with the deal, a Canadian newspaper said on Tuesday.
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Toronto’s Globe and Mail reported that the deal had faced opposition as holders of about 8m shares of Magna class A stock, equivalent to about 8% of the total, said on they had voted against the deal in proxies that had to be in by Friday, even after Magna tried to win them over in a series of meetings.
The paper added that more shareholders “gave signals of dissent behind the scenes”, bringing the total closer to the roughly 50m needed to vote down the deal when final results are tallied.
The Globe and Mail said Magna company secretary Brian Colburn told a special shareholders meeting earlier today that the deal had passed based on proxies already submitted, even before giving those shareholders in attendance in the sparse crowd an opportunity to speak or vote.
Magna reportedly didn’t reveal the results of the vote, other than to say that it had passed, and senior officials in attendance declined to comment, the paper noted.
Magna spokeswoman Tracy Fuerst told the Globe and Mail the company would likely announce the breakdown of the vote on Thursday, when the company would ask an Ontario [province] superior court judge to approve the plan to sell the stake to Deripaska.
“We are very pleased that this investment has been approved by Magna’s shareholders and that our companies are now more closely and strategically aligned to more efficiently lever our shared strengths,” Deripaska was quoted as saying an a statement emailed to the paper. “Our partnership with Magna gives us unique competitive advantages and significant growth potential within domestic and neighbouring markets, and we believe that Magna, as a truly global company, will help us achieve our international goals. We look forward to working with them to complete the transaction as promptly as possible.”
The Globe and Mail said Magna’s minority shareholders have in the past gone against Stronach’s wishes though, in other cases, he has been able to use his control to force issues.
But, the paper added, this was a so-called “majority of the minority” vote in which his controlling stake was disqualified.
Magna subsequently said in a statement that shareholders had approved the sale by majority vote.
“Subject to regulatory and court approvals, the arrangement is expected to become effective in late September 2007,” it added.
