Dissident Magna shareholders to appeal ruling on stock buyout

Auto parts maker Magna International Incsays a group of its minority shareholders will appeal a court decision giving the go-ahead to a controversial plan to buy out founder Frank Stronach’s controlling stock.

The company says it will defend its position “vigorously” and hopes to have the case moved forward as fast as possible.

Magna plans to pay Stronach a hefty premium to give up voting control of the company — US$300 million in cash and nine million class A shares plus additional fees that bring the total cost of the buyout to more than $1 billion.

An Ontario judge ruled Tuesday the plan is “fair and reasonable” to Magna’s shareholders, a majority of whom approved it at a vote held last month.

Members of a vocal minority of opposed shareholders including the Ontario Teachers’ Pension Plan and the Canada Pension Plan Investment Board challenged the plan in court, arguing the payoff is too rich and sets a bad precedent.

Shareholders who support the deal say it will unlock a significant amount of value in Magna’s stock, which has traded lower than its peers because of the company’s dual-class share structure.

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