* Magna shares rise 5.14 percent
(Adds reaction from pension fund)
By Pav Jordan
TORONTO (Reuters) - A Canadian court Tuesday
approved a plan by Magna International to pay founder
Frank Stronach close to a billion dollars in exchange for
giving up control of the auto parts giant he started from
scratch as a young Austrian immigrant in Canada.
The ruling paves the way for Magna to end the dual-class
share structure that had left control of the company in the
hands of its founder, who came to Canada when he was 21 with
only a couple of hundred dollars in his pocket.
The ruling paves the way for Magna to end the dual-class
share structure that had left control of the company in the
hands of its founder, who came to Canada when he was 21 with
only a couple of hundred dollars in his pocket.
"The Ontario Superior Court has approved the previously
announced plan of arrangement to eliminate Magna's dual-class
share structure," Magna said in a statement to the media.
Stronach will get $863 million worth of stock under the
deal, which will see the 77-year-old entrepreneur give up his
controlling, class B shares in return for 7.5 percent of the
company's class A shares.
He also gets $300 million in cash, control of a new
electric car-parts joint venture between Stronach and Magna,
and four years of lucrative consulting fees.
"By voting the new Magna shareholder structure into place,
shareholders are seeking greater control and have essentially
given management their vote of confidence," UBS analyst Tasneem
Azim told Reuters.
"It will now be up to management to deliver under its new
structure -- shareholders will have greater power to take Magna
to task if it doesn't."
In July, about three-quarters of Magna's subordinate
shareholders approved the deal to collapse the dual-share
structure. But at least six institutional shareholders,
including four major Canadian pension plans, opposed it,
calling the payoff to Stronach "unreasonable" and
"fundamentally unfair," and saying it set a bad precedent.
"We're disappointed with the results but we respect the
court's decision," said Deborah Allan, a spokeswoman at the
Ontario Teachers' Pension Plan.
She wouldn't comment on whether the pension fund will
appeal the judge's decision, laid out in 213 points across 40
pages.
Dissident Magna minority shareholders have 30 days to file
an appeal.
"Today's decision by the Superior Court affirms our
position that the claims of the dissident minority shareholders
are without merit," Magna Chief Financial Officer Vincent
Galifi said in a statement.
Giving new shares to Stronach will dilute Magna shares but
the deal is seen unlocking value in a stock that has traded
lower than its peers because of investor aversion to the
dual-class structure and concerns over Stronach's control.
($1=$1.03 Canadian)
(Reporting by Pav Jordan; editing by Peter Galloway and Rob
Wilson)
