07/08/2003 12:00AM

Magna proposes new division

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Magna International, the auto-parts company and parent of racetrack owner Magna Entertainment, plans to create a new company, that would include Magna International's majority stake in the racing concern, Magna officials said on Tuesday.

The plan, which has to be approved by two-thirds of Magna International's shareholders, would allow Magna International to shed some of the under-performing assets that have long been viewed as a drag on the auto company's stock price.

Shares in Magna International rose $3.61, or 5.2 percent, to $72.55 on Tuesday. Shares in Magna Entertainment sank 20 cents, or 4.1 percent, to $4.65, on what one stock analyst termed a "psychological effect."

"I don't know why you would need to have this happen to tell you that Magna Entertainment is under-performing, but that can be the only explanation," the analyst said.