Canadian law may be built on precedent cases, but the judge who oversaw Magna International's plan of arrangement to buy out Frank Stronach said there is little to take away from his ruling.
Speaking from the offices of Torys, his former firm, Justice H.J. Wilton-Siegel said Tuesday the deal's circumstances were so unique that it would be hard to draw parallels with future cases.
Chiefly, instead of weighing in with an opinion, Magna's "board did rather spectacularly vacate the field," he said.
His comment was a rarity because so little has been said about the case by the powers that be. The Ontario Securities Commission has been largely mum on the issue, other than releasing a formal review. That document raised questions about the proposed plan of arrangement, but as The Globe's Boyd Erman pointed out, it proved the OSC did not force Magna to answer its inquiries.
To recap the process, once the proposal for Mr. Stronach's exit was put forward, Magna's board of directors punted any responsibility to shareholders. At the time, Mr. Stronach's Class B shares made up less than 1 per cent of total equity, but represented two-thirds of total voting power. The total price tag for giving up these shares was $863-million.
On Tuesday Judge Wilton-Siegel, who approved the plan of arrangement after 75 per cent of shareholders voted in favour, said the deal's fate was ultimately decided by investment managers who owned the stock and had a short-term time horizon, somewhere in the range of six to nine months.
In contrast, big pension funds such as Canada Pension Plan Investment Board and Ontario Teachers' Pension Plan argued fervently against the deal and even appealed the decision. Managers at these shops have time horizons that stretch out 30 years and did not see long-term value in the decision.
**Update: It should be noted that Teachers' bought into Magna very late in the game, doing so simply to have a legal right to voice its opinion.