Teachers Fund to Vote Against Magna’s Russia Deal

Today Reuters is reporting that the Ontario Teachers’ Pension Plan is planning on voting against Magna’s arrangement with Russian billionaire Oleg Deripaska. As we reported on this blog earlier this summer, Magna sent a notice to all shareholders ahead of tomorrow’s meeting warning that this deal could lead to an indirect nationalization of Deripaska’s company, making the Russian government a minority shareholder in the corporation. In an op/ed published in the Austrian newspaper Die Presse, Robert Amsterdam argued the following: “Before the Magna deal was finalised, Mr Stronach visited with Russian President Vladimir Putin to seek his blessing. Evidently, Mr Stronach had to kiss Mr Putin’s ring in order to seal the deal. Such cosying up to the Kremlin raises the critical question: in making these business deals, are we helping Russia to integrate Western business practices and standards of corporate governance – or is Russia teaching us to tolerate autocracy?” Reuters: Teachers’ fund to vote against Magna’s Russia plan

TORONTO, Aug 27 (Reuters) – Ontario Teachers’ Pension Plan will vote against a restructuring plan by Magna International (MGa.TO: Quote, Profile, Research) which the pension fund says doesn’t consider Class A shareholders. Ontario Teachers said the proposed transaction to sell a chunk of Magna, one of North America’s biggest auto-parts makers, is a “de facto” change of ownership. Magna shareholders will vote on Tuesday on a $1.54 billion investment by Russian tycoon Oleg Deripaska, which the board of Magna approved in July. If approved, Deripaska would get 20 million common shares of Magna and six spots on the 14-seat board of directors of a new entity that will control Magna. Magna is betting that the Russian market will prove much richer than the depressed North American auto market. Analysts have estimated that the value of Magna’s average content per vehicle in the Russian market could reach $1,000, about 20 percent more than the $832 in content Magna supplies to North American vehicles. Deripaska, described by Forbes magazine as Russia’s second richest man, is unable to travel to the United States after being stripped of his U.S. visa for suspected criminal links, according to a Wall St. Journal report earlier this year.

UPDATE: We have been in contact with a representative from the Ontario Teachers’ Pension Plan, and they have alerted us to this detailed proxy vote information for their opposition to the Magna-Russian Machines arrangement, which they contend is a “de facto change of control of Magna.”