Magna's Board is reviewing its membership after a controversial buyout deal that swapped Stronach control of the auto parts giant for common stock.
Magna International Inc. (TSX: MG; NYSE: MGA) announced late yesterday that Belinda Stronach, daughter of Magna founder Frank Stronach, will be “resigning” from her role as Executive Vice-Chair and member of the Board of Directors, effective 31 December 2010.
“The Board wishes to express our sincere and deep appreciation to Belinda for the valuable contribution she has made to Magna over many years and we wish Belinda every success in the future,” said Michael D. Harris, Lead Director, in a terse statement, more notable for what it didn’t include.
Magna’s Board is reviewing its membership after a controversial buyout deal earlier this year that swapped Stronach family control of the auto parts giant for common stock at a steep cost to other stockholders of roughly a billion dollars.
It also gave founder Frank Stronach control of a newly spun off electric car components operation for very little money.
The Stronach Trust received $300 million in cash and 9 million Class A shares for its Class B stock because of the disputed deal. Previously the Stronach family had about 66% of voting rights at the Canadian auto parts maker even though the family only owned 1% of the equity.
The deal was vigorously objected to by dissident shareholders, who claimed it unjustifiably enriched Frank Stronach.
The dissident shareholders included the Canada Pension Plan Investment Board, Ontario Teachers’ Pension Plan, OMERS, the Alberta Investment Management Corp. and British Columbia Investment Management Corp.
Dissidents contended that the transaction was “abusive of shareholders and the capital markets” for a variety of reasons, including the estimated 1,800% premium approved by the Magna board for the Stronach Class B Shares relative to the market price of such kinds of Subordinate Voting Shares. One study showed that the usual premium for such a deal is about 30%.
Magna has more than 92,000 employees in 245 manufacturing operations and 80 product development, engineering and sales centers in 25 countries.
