10/13/2010 3:30PM

MI Developments to hire adviser over Stronach offer


MI Developments will hire a financial adviser to perform an evaluation of an offer by its chairman, Frank Stronach, to buy all of the outstanding stock in the company, chief executive Dennis Mills said Wednesday.

The financial adviser – who could be named as early as Wednesday night – would conduct the evaluation over the course of the next three weeks, Mills said. Mills said the financial adviser would have no connection to MI Developments, its related companies, or members of the company’s board.

Stronach announced two weeks ago that he had offered to buy all of the shares in the company at $13 a share, a transaction that would cost him $600 million at the trading price of the company’s shares that day. However, once the announcement was made, however, shares in MI Developments soared from $10.67 to $14.10 in one day, indicating that investors believed that Stronach’ s offer is too low. After trading as high as $14.78 last week, the stock closed on Wednesday at $14.10, and it has not dipped below $13 since the offer was made.

Mills said he could not comment about how the rise in the stock’s price would impact the company’s evaluation of the offer. The offer would have to be approved by the company’s board, and then by the company’s shareholders.

Stronach already owns approximately 1 percent of the company’s existing stock, but he holds approximately 60 percent of the voting shares because of a dual-stock structure with supervoting shares. Stronach would be prohibited from exercising his voting rights in any vote to approve the offer.