UPDATE 2-MI Developments shares soar on Stronach deal

* Stronach to cede voting control for horse racing assets

* MID shares up 45.6 percent on the TSX
(Adds details, updates share price)

TORONTO, Dec 22 (BestGrowthStock) – Canadian billionaire Frank
Stronach is set to give up control of MI Developments
(MIMa.TO: ), the property arm of Magna International (MG.TO: ), in
exchange for horse racing track assets, the company confirmed
on Wednesday.

Reuters reported on Tuesday that the deal was in the works,
leading MI Developments’ (MID) stock to be halted pending news
after rising more than 4 percent on the Toronto Stock Exchange.
[ID:nN21256283]

Shares of MID soared 45.6 percent to C$28.12 after they
resumed trading on Wednesday, though volume was low.

Stronach has long been chairman of MID and took over as
chief executive of the company last month. He controls a large
number of class A subordinate voting shares and class B shares
in the company, which together amount to about 60 percent of
the total voting power of MID’s outstanding shares.

Stakeholders such as hedge funds Farallon Capital and David
Einhorn’s Greenlight Capital have complained publicly that MID
has not always acted in the best interest of its shareholders,
especially in its dealings with now-bankrupt horse racing and
entertainment company Magna Entertainment.

Under the proposal, Stronach would give up his class B
voting shares in exchange for horse racing and gaming assets,
as well as $20 million of working capital, MID said.

The assets include Santa Anita Park, Golden Gate Fields,
Gulfstream Park, Portland Meadows, MID’s joint venture
interests in Maryland Jockey Club, as well as horse racing
technology assets, all formerly owned by Magna Entertainment.

MID said the proposal was put forward by shareholders of
its class A subordinate voting shares, including eight of its
top 10 shareholders. MID said Stronach also supported the
proposal.

If the deal goes through, MID would eliminate its dual
class share structure, and each class A share would be changed
into one common share, while each class B share (with the
exception of Stronach’s class B shares, which would be
canceled), would be converted into 1.2 common shares.

MID would keep its real estate property business and would
be restricted from having any business relating to horse racing
or gaming.

The transfer, if completed, would be effective Jan 1.

Stronach completed a very similar deal with the board of
auto-parts giant Magna International in August.

Magna paid Stronach upward of $1 billion in cash, stock,
and other incentives, to loosen his grip the auto parts company
that he founded in a Toronto garage more than half a century
ago. [ID:nN31255055]

MID said its board of directors has established a special
committee of independent directors to review and evaluate the
proposal and to make recommendations to the board. It said the
board of directors would give investors more information “in
due course.”

($1=$1.01 Canadian)
(Reporting by John McCrank; editing by Peter Galloway)

UPDATE 2-MI Developments shares soar on Stronach deal