Frank Stronach's Magna International Secures Control of Opel AG

Strategic Insights -

Frank Stronach's Magna International Inc. has reached a deal with the German government and General Motors (GM) to take a controlling stake in Opel AG, GM's main European subsidiary. The Austrian-born entrepreneur, who built a tiny tool and die shop into an auto parts powerhouse, will lead a consortium with Russian lender Sberbank in acquiring a majority stake in Opel. Under the framework, Magna will hold a 20% stake, Sberbank 35%, and GM 35%, with the remaining 10% going to Opel employees.

Key Takeaways:

  • Frank Stronach, the 76-year-old founder and controlling shareholder of Magna International, has led his company to a historic deal with the German government and General Motors to secure control of Opel AG.
  • The consortium, consisting of Magna and Sberbank, will own a majority stake in Opel, with GM retaining a 35% holding and Opel employees holding 10%.
  • The investment represents a significant milestone for Magna, as it marks the first time a Canadian company has held a significant stake in a major international auto maker.
  • Frank Stronach's entrepreneurial leadership has steered Magna from a small tool and die shop in 1957 to a global auto parts powerhouse with annual revenues of $23.7 billion and over 70,000 employees worldwide.
  • Despite the high risks involved, industry experts such as Dennis DesRosiers see the investment as an "unprecedented opportunity" for Magna, should it succeed.

Statistics:

  • $1.7 billion in cash on hand for Magna to weather the industry's storm and bid for ailing companies.
  • $2.34 billion invested by the German government in a bridge loan for Opel.
  • Annual revenues for Magna reached $23.7 billion in 2008.
  • Over 70,000 Magna employees worldwide.
  • $26 billion in annual revenues for Magna in 2007.
  • Opel's stake in the consortium totals 10%.

Sources:

  • Stronach, F. (no date). Magna International Annual Report.
  • Lumley, E. (no date). Quoted in "Stronach's Magna International to control Opel AG" (newspaper article).
  • Cooper, R. (no date). Quoted in "Stronach's Magna International to control Opel AG" (newspaper article).
  • McCall, W. (no date). Quoted in "Stronach's Magna International to control Opel AG" (newspaper article).
  • DesRosiers, D. (no date). Quoted in "Stronach's Magna International to control Opel AG" (newspaper article).