The racetrack assets that MI Developments Inc is handing over to Frank Stronach are worth between $1,610 (U.S.) and $2,009 for every multiple voting share owned by the entrepreneur and founder of Magna International Inc. .
Mr. Stronach controls the real estate and gambling company through his ownership of 363,414 class B multiple voting shares. He is surrendering those shares in return for racetracks in Florida, California and Oregon, MI's share of tracks in Maryland, and other racing assets.
The deal, already supported by a majority of MI's minority shareholders, ends a long-running dispute between Mr. Stronach - the founder, chairman and chief executive officer of the company - and institutional shareholders that have opposed investments in racetracks and urged the company to divest the assets.
The racetracks and other racing assets are worth between $585-million and $730-million, MI said in a statement issued by its board of directors and a special committee set up to examine the transaction.
The special committee is recommending that shareholders approve the transaction at a vote scheduled for late March.
Among the reasons for the recommendation are that "either or both of the existence of the dual class share structure of [MI]and [MI's]continued financial support of its racing and gaming business has had a negative effect on the trading price of the class A subordinate voting shares," the company's statement said.
The deal includes clauses preventing MI from investing in racetrack and gambling properties, and calls for the election of a new board of directors by the common shareholders.
Shares of MI have more than doubled since the proposal was announced in December. They closed at $28.52 (Canadian), up 92 cents, Tuesday on the Toronto Stock Exchange.
MI controlled the gambling and racetrack assets through its control of Magna Entertainment Corp., which went into Chapter 11 bankruptcy protection in the United States in 2009.
The move by Mr. Stronach to surrender control of MI came after a controversial deal last year in which auto parts giant Magna International bought out his controlling stake in that Aurora, Ont.-based company for $863-million in cash and shares.
That deal included transferring the assets of Magna's electronic-vehicle business into a joint venture that is now controlled by Mr. Stronach. The Magna deal represented an 1,800-per-cent premium for Mr. Stronach's shares.Report Typo/Error