CANADA: Magna completes 20% stake sale to Russians

By just-auto.com editorial team | 21 September 2007

Magna International on Thursday night (20 September) said it had completed the sale of a one-fifth stake to Russian Machines.

Magna founder and chairman Frank Stronach said in a statement: "We are pleased to have completed this very important transaction with Russian Machines. I believe we are now well positioned to capitalise on the growth opportunities in Russia and other automotive markets, while minimising the risks of investing in those markets."

just-auto reported on 31 August that Magna International had won the necessary regulatory approvals to sell the 20% stake to Russian Machines, owned by billionaire Oleg Deripaska, for $US1.5bn.

Russian Machines, the Stronach Trust and other parties to the deal had received final court approval, Magna said last month. The Toronto Stock Exchange had granted conditional approval for the issue and listing of the 20m Class A shares to be sold to Russian Machines while the European Commission had granted merger control clearance for the transaction.

Last night, Magna International said that, under the arrangement, M Unicar (Newco), through its indirectly owned subsidiary 2143455 Ontario, a Canadian holding company funded by a subsidiary of Russian Machines, acquired 20m Magna Class A shares for approximately $US1.54billion.

Newco is owned indirectly by the Stronach Trust, Russian Machines and Donald Walker, Siegfried Wolf, Vincent Galifi, Jeffrey Palmer and Peter Koob, who are all Magna executives.

Newco and its subsidiaries now hold 726,829 class B shares and 20,605,000 class A subordinate voting shares, which collectively represent approximately 68.6% of the total voting power of all the outstanding shares of Magna.

"The transaction allows Newco and its shareholders to effect a strategic investment in Magna and participate in the future growth and success of Magna on a global basis," the components maker and contract vehicle developer and assembler said in a statement.

Magna added that, as a result of the arrangement becoming effective, all of the conditions of its offer to purchase for cash up to $US1,536,600,000 of its class A shares, which expired at 5:00pm Toronto time last night, have been satisfied or waived.

"Our strategic investment in Magna will allow Magna to build a strong presence in the rapidly expanding Russian automotive market as well as in eastern Europe and other key markets," said Deripaska, who is chairman of both Basic Element and Russian Machines.

Toronto's Globe and Mail newspaper reported last month that the deal had, however, faced opposition as holders of about 8m shares of Magna class A stock, equivalent to about 8% of the total, said they had voted against the deal, even after Magna tried to win them over in a series of meetings.

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