The OSC’s Reasons in Magna Will Affect Future M&A Transactions

The Ontario Securities Commission recently released the reasons for its decision in connection with the plan of arrangement implemented by Magna International Inc. in August 2010. Under the arrangement – which attracted significant controversy – the Stronach Trust ceded control of Magna through the elimination of the dual class share structure in exchange for cash and shares valued at approximately C$800 million. The transaction was delayed after the OSC intervened and ordered Magna to provide extensive additional disclosure before shareholders voted on the transaction. Magna subsequently implemented the transaction after its shareholders voted in favour and a court approved the transaction after hearing shareholder objections.