Frank Stronach is far from getting ready to sail into the sunset, although he is finally giving up the iron grip he has held on Magna International, Inc, the global supplier and contract vehicle assembler he founded.
“Magna’s like raising a kid,” the 77-year-old chairman, an Austrian immigrant who founded what is now one of the world’s top auto parts companies in 1957, told just-auto. “It’s an adult. The adult has a certain direction. It’s not like a baby which you gotta guide, like the electric car. I got a new baby now.”
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The electric car is where Stronach’s attention has already turned. After relinquishing control of Magna, he will immerse himself even deeper in this emerging technology once holders of the supplier’s class A shares approve a deal worth US$863m that eliminates the multiple-vote class B shares he has used to control the company. He’ll be left with 7.44% of a widely held company.
Part of the deal includes setting up a joint venture that will take over some Magna assets in electric vehicles. He will contribute some cash and hold 27%, while Magna holds the other 73%.
The joint venture will focus on key systems in an electric vehicle such as the control system, heating, ventilation and air conditioning system and the gears that drive the electronic motors.
It’s not clear yet if Stronach wants to get into the battery business. Magna has an agreement with KoKam of South Korea, which produced the batteries Magna used in the battery-powered Focus compact the auto parts company put together for Ford.
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By GlobalData“We just want to be one of the best in producing rolling chassis with all the electrical components,” Stronach said.
Customers would attach their interiors and exteriors to the chassis or Magna could do that for them as well.
He said he insisted the deal that takes out his controlling share ownership include the electric vehicle joint venture.
This slice of the business could generate $20bn in revenue for Magna and the joint venture in 10 years, he believes.
Stronach said he is in good health and will remain as chairman until at least 2014, when annual consulting fees he receives from the company are scheduled to end.
But senior executives are already talking about changing one policy Stronach put in place after Magna’s brush with financial disaster in the early 1990s – maintaining a balance sheet brimming with cash.
“I personally have been of the view,” said co-chief executive Don Walker, “that we could use the cash on the balance sheet to maybe stay at a neutral amount – so no net debt, no net cash – to take advantage of opportunities, whether it’s through acquisitions [or] moving into ‘greenfield’ areas.”
