Magna International posted a quarterly profit after a year-earlier loss

Article by Christian Andrei, on August 26, 2010

A year ago, Magna International Inc. may have posted a loss but in the past quarter, it boasts to have had a profit that could be attributed to cost cuts and the increase in global vehicle production.

Magna has also signed a deal with founder Frank Stronach's group, whereby Class A subordinate voting shares could decide to junk the dual-class share structure by which Stronach has controlled Magna.

The Stronach Trust has about 66% of Magna's voting rights through 726,829 outstanding Class B shares it indirectly owns. Each Class B share is said to carry 300 votes.

Once the deal is approved, Magna will buy and cancel all the Class B Shares and the Stronach Trust would indirectly get 9 million newly issued Class A Shares and $300 million in cash.

According to Magna's closing price of $62.53 last Wednesday on the New York Stock Exchange, the deal would have a value of $863 million. The deal, which would leave the Stronach Trust with a voting interest of 7.44%, also covers the creation of a joint venture to manufacture electric vehicles.

For the joint venture, Magna would invest $220 million for a 73% interest. For the rest of the stake, the Stronach group would invest $80 million but would have effective control with the right to appoint three of five board members. [via autonews]

Topics: magna, profit

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