Last Monday, the Ontario Superior Court of Justice denied an appeal from Magna International Inc. shareholders who opposed ending the dual-class share structure of the company.
The agreement, which was approved on July 23 by investors of Canada's largest auto-parts maker, cuts the control of founder Frank Stronach over the company he founded in 1969.
This provides the Stronach Trust about $976.2 million in cash and shares, based on the closing price last Monday on the New York Stock Exchange. The appeal was filed by a group of Canadian pension funds that included the Canada Pension Plan Investment Board, the country's second-largest pension fund.
Reportedly, this plan provides an excessive payout to Stronach. Magna asked for a quick hearing since the deal with the Stronach Trust could be ended if approval wasn’t received by Aug. 31.
In an e-mail, spokeswoman Linda Sims said that Canada Pension Plan won't file an appeal. Meanwhile, the Ontario Teachers' Pension Plan, which also indicated its opposition, has yet to comment on the report.
At the meeting last July, investors approved the restructuring with about 93% of the votes. The company said that about 75% of Class A shares voted were in support.
Created by a committee of independent directors, the proposal calls for the Stronach Trust to get 9 million new Class A shares, or a 7.4% stake, for the Class B stock that provides about 66% of voting rights. The trust would also be getting approximately $300 million in cash. [via autonews - sub. required]