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Fred Lum/The Globe and Mail

A committee of independent directors of Magna International Inc. has reviewed an $863-million (U.S.) deal to buy out the multiple-voting shares held by founder Frank Stronach, and has concluded it will make no recommendation to shareholders about how they should vote on the proposal.

The auto parts manufacturer issued a proxy voting circular for shareholders late Wednesday in advance of a June 28 meeting on the restructuring offer, but the document contains little independent analysis to guide investor voting on the deal.

A special committee of the board - comprised of independent directors Mike Harris, Louis Lataif and Donald Resnick - concluded Magna shareholders should consider an array of factors, including the fact there is no assurance any alternative proposal will emerge to eliminate the company's unpopular dual-class share structure and the fact Mr. Stronach has indicated he is not willing to consider any alternative proposals at this time.

The committee said it retained Canadian Imperial Bank of Commerce to advise it on the offer, but little of the analysis done by CIBC is included in the proxy circular.

The committee said it did not ask CIBC to prepare a fairness opinion, adequacy opinion or formal valuation of the deal. Under securities regulations, the deal does not legally require a formal valuation or even a vote of minority shareholders.

However, the special committee said CIBC advised that the offer to issue 9 million new subordinate voting shares to Mr. Stronach to replace his existing multiple-voting shares would cause dilution that "would be significantly greater than was the case for other historical transactions in which dual-class share structures were collapsed."

The new proxy circular reiterates the same financial terms disclosed last month when Magna announced the proposed restructuring, which will see Magna become a widely held company with 7.44 per cent of the shares owned by Mr. Stronach. Mr. Stronach would receive $300-million (U.S.) in cash and 9 million Class A subordinate voting shares of Magna in exchange for his 726,829 multiple-voting shares.

The circular contains a number of new details about a proposal to also create a joint-venture with Mr. Stronach that would see him lead a new company that will contain Magna's electric vehicle division. Mr. Stronach would run the new corporation and own a 27-per-cent stake.

The company says 275 full-time employees globally are expected to be transferred to the E-Car Partnership, which will later be converted into a corporation.

Magna reveals Mr. Stronach wanted to maintain control of the electric vehicle division because he felt "it needed a 'focused and strong hand' to guide it through its early and formative stages."

The company said Mr. Stronach also advised the company that the deal would have to be supported by a majority or minority shareholders of the company's subordinate voting shares, even though such a vote was not required.

Under the proposed deal, Mr. Stronach will remain chairman of the Magna board, but will resign from the board's nominating committee, which identifies new directors for election when there are vacancies on the board. All current directors will continue to serve.

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