Tesma Shareholders Approve Plan by Magna to Take Unit Private

Shareholders of auto parts producer Tesma International Inc. approved a plan Tuesday by its parent Magna International to take the engine and transmission maker private. At a special meeting, shareholders holding Tesma's class-A subordinate voting shares voted 71 percent to back the privatization move. In addition, more than 60 percent of the votes cast by minority holders, excluding Magna and its related parties, backed the plan. For the deal to proceed, it had to be accepted by two-thirds of shareholders, including a majority of non-Magna shareholders.

From Canadian Press

AURORA, Ontario — Shareholders of auto parts producer Tesma International Inc. approved a plan Tuesday by its parent Magna International to take the engine and transmission maker private.

At a special meeting, shareholders holding Tesma’s class-A subordinate voting shares voted 71 percent to back the privatization move. In addition, more than 60 percent of the votes cast by minority holders, excluding Magna and its related parties, backed the plan. For the deal to proceed, it had to be accepted by two-thirds of shareholders, including a majority of non-Magna shareholders.

The privatization transaction for the 5,700-worker Magna subsidiary is expected to become effective Feb. 6, subject to final court approval.

Tesma’s chief financial officer, Tony Dobranowski, said there are no imminent changes expected for Tesma’s management structure, including his own position and the chairman and CEO spots held by Manfred Gingl. Gingl is also executive vice chairman and a director of Magna.

Under the going-private plan presented last October, Magna is buying out other stockholders in Tesma, which it spun off as a separate company in 1995, offering 0.44 of a Magna share for each share of Tesma.

Instead of Magna stock, holders of Tesma shares can opt for equivalent cash, up to a total cash component of $350 million.

Tesma has nearly 18.3 million class A subordinate voting shares with a current stock-market value of about $750 million. There are 14.2 million class B shares which each carry 10 votes, all owned by Magna.

Tesma’s board announced late last year that a dividend of 24 cents per share – up from 18 cents in the previous quarter – will be paid Feb. 15 to shareholders of record on Feb. 3.

Magna also proposes to consolidate its Decoma International Inc. body-part subsidiary and Intier Automotive Inc. vehicle-interior spin-off in separate bids. The three privatization offers are valued at a total of about $1.3 billion.

Magna, based in Aurora, north of Toronto, says it will be able to respond more efficiently as a larger company – reversing a longtime contention that smaller publicly traded subsidiaries provided essential flexibility.

Shares in Tesma gained 39 cents to close at $41.45 in Tuesday trading on the Toronto Stock Exchange. Magna’s class-A shares rose 21 cents to close at $94.62.

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