A Canadian judge approved on Tuesday 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 to Canada.
The deal sees 77-year-old Stronach give up his controlling, class B shares in the company in return for 300 million new class A shares, $300 million in cash, control of a new electric car-parts joint venture between Stronach and Magna, and four years of lucrative consulting fees.
About three-quarters of Magna's subordinate shareholders approved the deal in July, but three prominent Canadian pension plans and other institutional investors opposed it, calling the payoff to Stronach "unreasonable" and "fundamentally unfair," and saying it set a bad precedent.
Dissident minority shareholders of Magna have 30 days to file an appeal. Giving new shares to Stronach will dilute Magna shares but 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. Magna shares rose 2.65 percent to C$81.75 in early trade in Toronto.
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