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GM’s Stock Surges on Buffett Buy

“Oracle of Omaha” snags 10 million shares.

by on May.16, 2012

But will Warren Buffett now upgrade his old Cadillac DTS, too?

Analysts and investors alike will be watching the ticker closely today to see how the market responds to word that the “Oracle of Omaha” has grabbed 10 million shares of General Motors stock.

According to a filing with the Securities and Exchange Commission, Buffett’s investment firm Berkshire Hathaway will spend $256.6 million for the stock, a nearly 20% premium over their value of $214.2 million when trading on the New York Stock Exchange wrapped up on Tuesday.

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But that’s still well behind the $330 million Buffett would have invested during GM’s November 2010 IPO. And the question is whether this move signals the possible turnaround in GM shares which have been lagging like most automotive stocks in recent months.

The maker has staged a modest recovery from its $19-a-share 52-week-low, and GM stock surged by $1 as soon as the market opened Wednesday morning before settling back slightly.

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Auto Stocks Take a Hammering

Is there worse to come?

by on Sep.23, 2011

GM stock staged a modest rebound on Friday but it took serious hits for the week - as did most auto-related manufacturers and retailers.

Some of the key automotive stocks ended the week with a modest reprieve after being hammered on markets around the world for most of the week, but the upturn in shares of General Motors, Ford and other auto-related manufacturers and retailers barely begins to make up for the losses they’ve experienced since traders began to panic over fears of a double-dip global recession.

It’s hard to point to any single factor that triggered the week’s sell-off since so many things appear to be going wrong, from the downgrade of Greek banks to the U.S. Federal Reserve’s warning that the economy is likely to take more time than expected to recover.

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But in keeping with the old adage that when the economy catches cold the auto industry gets pneumonia, companies like GM, have been among the most hard-hit.

Detroit stocks were among the hardest hit.  Ford Motor Co., generally seen as the strongest of the domestic makers, bounced back slightly on Friday but still failed to close above the $10 mark, at $9.86, well below its 52-week high of $18.97.

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Dissident Shareholders Lose at Magna

Founder Frank Stronach and family prevail in stock swap.

by on Aug.31, 2010

Dissident shareholders have lost their bid to block a plan to eliminate Magna’s dual class of shareholders. (See Stronach Prevails at Magna! Shareholders Approve Lavish Buyout of Privately Held Family Shares by Ken Zino. )

The plan, which as already been approved by Magna’s shareholders, unjustifiably enriched Frank Stronach, Magna’s founder, according to the dissidents, who waged a vigorous campaign to block the transaction.

The dissident shareholders included the Canada Pension Plan Investment Board, Ontario Teachers’ Pension Plan, OMERS, the Alberta Investment Management Corp. and British Columbia Investment Management Corp.

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Dissidents also argued that Justice Wilton-Siegel placed too much emphasis on a shareholder vote and the rise in the company’s shares after the plan was announced.

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Stronach Prevails at Magna! Shareholders Approve Lavish Buyout of Privately Held Family Shares

The controversial and expensive transaction still faces a "fairness challenge" in Ontario Superior Court, though.

by on Jul.23, 2010

Magna founder Frank Stronach is ready to relinquish control of the Canadian mega-supplier.

Well, score a big victory for the Stronach family. Magna International Inc. (TSX: MG.A; NYSE: MGA) today announced that its shareholders approved the previously announced proposal to eliminate Magna’s dual class share structure, paying the founding Stronach family a huge premium in the process.

Stronach currently controls more than 54% of Magna shares while owning just 1% of its equity.

The controversial deal ends founder Frank Stronach’s control of the company, but at a steep price to shareholders of the common stock, and gives him control of a new electric car components operation for very little money.

The so called “Plan of Arrangement” that buys out the Stronachs was approved by 75.28% of the 89,847,120 votes cast by the disinterested “minority” holders of Magna’s Class A Subordinate Voting Shares.

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Following the Loonies!

Critics contend that the proposed transaction is “abusive of shareholders and the capital markets” for a number of reasons, including the estimated 1,800% premium being paid by Magna for the Stronach Class B Shares relative to the market price of the Subordinate Voting Shares. One study shows that the usual premium for such a deal is about 30%.

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Magna Share Vote Coming in Two Weeks

Controversial deal would end founder Stronach's control of the company in an expensive transaction for other shareholders.

by on Jul.09, 2010

Stronach is ready to trim his ties to the Canadian mega-supplier - but at a steep price.

Magna International Inc. (TSX: MG.A, NYSE: MGA) today announced that it has filed with the Canadian securities regulatory authorities and the U.S. Securities and Exchange Commission a disclosure supplement  to Magna’s Management Information Circular/Proxy Statement that was previously mailed to shareholders.

The Circular details the proposed elimination of Magna’s dual-class share structure by which the founding family controls the company with little actual equity. The supplement contains all additional disclosures that Magna is required to make by an order issuedby the Ontario Securities Commission when shareholders objected to the new corporate structure.  (See OSC Orders Magna to Disclose More on Stock Deal)

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Loonie?

The controversial deal would end founder Frank Stronach’s control of the company, but at a steep price to other shareholders of the common stock Stronach would also get control of  Magna’s newly formed electric car components operation for very little money.

Stronach currently controls more than 54% of Magna shares while owning just 1% of its equity. The proposal would give him $300 million in cash, and nine million shares of what would then become watered common  stock.

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OSC Orders Magna to Disclose More on Stock Deal

Magna postpones a special meeting of shareholders to comply.

by on Jun.25, 2010

Magna founder Frank Stronach is ready to trim back his ties to the Canadian mega-supplier.

The Ontario Securities Commission (OSC) has issued an order requiring Magna International Inc. (TSX: MG.A, NYSE:MGA) to make additional disclosures in order to proceed with its proposed transaction to eliminate the company’s dual class share structure.

The deal would apparently end founder Frank Stronach’s control of the company, but at a steep price to shareholders of the common stock.

Stronach controls more than 54% of Magna shares while owning 1% of its equity.

OSC said the proxy “fails to provide sufficient information concerning the desirability or fairness of the Proposed Transaction and the board of directors of Magna has not made useful recommendations regarding the arrangement in the Circular.”

OSC also said, “it has been alleged that the Proposed Transaction is abusive of Shareholders and the capital markets for a number of reasons, including the estimated 1,800% premium being paid by Magna for the Class B Shares relative to the market price of the Subordinate Voting Shares.”

Then OSC went on to say, “It is clear that the Special Committee (of the Magna Board) was aware and concerned that the premium being paid to the Stronach Trust under the Proposed Transaction is considerably in excess of the premiums paid on other transactions collapsing multiple voting share structures.”

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Under a Magna Board approved plan, the Stronach Trust would receive $300 million in cash and 9 million Class A shares for the Class B stock that currently gives the family roughly 66% of voting rights at the Canadian auto parts maker. The deal values Stronach’s payout at $927 million. In New York Class A is trading at about $70 a share.

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Magna Founder Stronach Surrendering Control

Changes drive up supplier’s stock, ratings.

by on May.07, 2010

Magna founder Frank Stronach is ready to trim back his ties to the Canadian mega-supplier.

Magna International Inc. one of the world’s largest automotive suppliers, has disclosed that founder Frank Stronach is volunteering to surrender his control over the company, one of several moves generating a strongly positive response from both shareholders and industry analysts.

The Canadian automotive supplier said it has entered into an agreement with the Stronach Trust under which holders of Magna’s Class A subordinate voting shares would be given the opportunity to decide whether to eliminate the dual class of share through which Magna’s founder, Frank Stronach, and his family have controlled Magna since the late 1970s.

The proposed agreement would also set a termination date and declining fee schedule for the consulting, business development and business services contracts Magna has in place with Austrian immigrant and company founder Stronach, Magna said.

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However, the transaction would establish a joint venture with the Stronach group to jointly continue to pursue opportunities in the vehicle electrification business, which Magna has recently expanded.

“We believe the proposed transaction, if approved by shareholders, has the potential to unlock significant share value for Magna shareholders and establish a strong foundation for the company’s continued and long-term success”, said Don Walker and Siegfried Wolf, Co-Chief Executive Officers of Magna in a joint statement.

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