Supplement | HBS Case Collection | November 2010 (Revised April 2011)

Magna International, Inc. (A) (CW)

by Timothy A. Luehrman and Yuhai Xuan

Abstract

Magna International, Inc., a Canadian-based automotive parts manufacturer, is considering whether and how to unwind its dual-class ownership structure. A family trust controlled by the founder owns a 0.65% economic interest in the company but has 66% of the votes via a super-voting class of shares. Officers of the company are considering how to fashion a transaction that will end the family's control and win the approval of both classes of shareholders. The Magna (A) case asks the students to weigh the costs and benefits of dual-class ownership and the best way to convert to single-class. The Magna (B) case describes the proposal that Magna's board put to a shareholder vote. Students are asked to evaluate it and decide whether they would approve it.

Keywords: Cost vs Benefits; Voting; Governance Controls; Market Transactions; Production; Ownership; Business and Shareholder Relations; Value Creation; Auto Industry; Manufacturing Industry; Canada;

Citation:

Luehrman, Timothy A., and Yuhai Xuan. "Magna International, Inc. (A) (CW)." Harvard Business School Spreadsheet Supplement 211-707, November 2010. (Revised April 2011.)