Frank Stronach plans to cede control of the auto parts giants he founded
Frank Stronach may relinquish his majority control of the Canadian auto parts giant, Magna International. In a deal announced today, Magna proposes doing away with the dual share structure that has allowed the Stronach family to control the company since the late 1970s. Magna would purchase the class B voting shares owned by the Stronach family trust for US$300 million, leaving the trust with a minority stake. The trust would also receive 9 million class A shares, for a total transaction worth US$863 million. In a statement the company said the deal has the “potential to unlock significant share value for Magna shareholders.” The intent is that Stronach would continue as chairman, but the hefty consulting fees that Magna pays to the Stronach family would end in 2014. “While I am content to maintain the status quo, I understand the potential benefits of management’s proposal, particularly the opportunity to establish a strong foundation for the future,” said Stronach.