Magna shareholders approve Stronach's Russian deal

Despite misgivings from some quarters, shareholders of auto parts giant Magna International have approved founder Frank Stronach's plan to sell a big chunk of the company to a Russian billionaire.

The company announced Tuesday thata majority of voteswere tallied in favour of the deal. It did not immediately reveal the percentage supporting the new arrangement. The news will come on Thursday.

The$1.54-billion deal would give Oleg Deripaska, an industrialist with close ties to Russian President Vladimir Putin, power to nominate six members of an expanded, 14-member Magna board of directors.

A Stronach family trust would have power to nominate another six. The company's two top executives would also get seats on the board.

Some minority institutional shareholders were unhappy with the deal, saying it would transfer too much control to Deripaska for uncertain promises of gains down the road.

The Ontario Teachers' Pension Plan went public with its objections, and had said it would vote againstthe new arrangement.

As Teachers' saw it, the deal represented "a de facto change of control of Magna" because a Deripaska-controlled subsidiary "will control 50 per cent of the director appointments while owning only 20 per cent of the equity."

This would happen "without any consideration being given to the Class A shareholders who represent the majority of the equity capital of the company," it said.

Stronach has said the Deripaska investment will speed Magna's inroads into the Russian market.Deripaska controls Russia's second-largest automaker, GAZ.

"We very pleased that this investment has been approved by Magna's shareholders and that our companies are now more closely and strategically aligned to more efficiently lever our shared strengths," Deripaska said in a statement.

"Our partnership with Magna gives us unique competitive advantages and significant growth potential within domestic and neighboring markets."

Magna said the new arrangement would take effect in late September.