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.
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.