* Agrium says Jana's plan to split company is
* Agrium says integrated strategy has paid off for investors
By Euan Rocha
TORONTO, March 4 The war of words between
fertilizer maker Agrium Inc and its biggest shareholder,
Jana Partners, escalated on Monday with Agrium slamming the
hedge fund's plan to split the company in a letter to investors
ahead of its annual meeting next month.
Calgary, Alberta-based Agrium, which has begun mailing its
proxy circular to shareholders ahead of the meeting on April 9,
said Jana's plan is an "ill-conceived scheme" that will destroy
The activist U.S. hedge fund, which owns some 7.5 percent of
Agrium's shares, has for months demanded a number of changes at
the company, including a split between its wholesale fertilizer
production arm and its retail business, which sells seeds, crop
protection chemicals, fertilizers and other farm products.
"Nothing in Agrium's new appeal to shareholders addresses
the board's total failure to unlock Agrium's true value
potential," Jana said in an emailed statement to Reuters.
Talks aimed at developing a truce between the two sides
broke down in February and Jana has proposed five candidates for
election to Agrium's 13-member board.
The proxy fight is the latest in a series of high-profile
battles led by activist investors seeking to shake up the boards
of leading Canadian companies. Last year, U.S. investor William
Ackman, using a similar playbook to the one now being employed
by Jana, succeeded in installing his hand-picked candidate as
chief executive of Canadian Pacific Railway Ltd.
Jana, a New York-based hedge fund, has in the past won
high-profile campaigns at companies such as Marathon Petroleum
Corp and McGraw-Hill Cos Inc.
In the fight with Agrium however, Jana faces an uphill
battle convincing fellow shareholders of the merits of its case
as Agrium's stock has more than quintupled in value in the last
eight years, a fact Agrium repeatedly highlighted in a message
to shareholders on Monday.
"This is a simple choice between Agrium's highly successful
strategy that has delivered two consecutive years of record
financial results and generated a 467 percent shareholder return
since 2005, versus Jana Partners' ill-conceived scheme to break
up the company," said Agrium's chairman, Victor Zaleschuk.
Jana argues that Agrium's retail business is undervalued
within the combined entity. Agrium, which is currently the top
North American farm products retailer, has gradually grown its
business through a series of acquisitions and continues to do
so. It says the retail arm acts as a buffer because its
wholesale business is typically cyclical in nature.
The fund has also attacked Agrium for failing to have enough
retail experience on its board. In response Agrium last month
named two new independent directors who it says bring a wealth
of industry experience to its board. Jana, however, panned the
choices and accused Agrium of making a "hollow attempt to fight
off real value-maximizing change."
Agrium in turn questioned the independence of Jana's slate
in its letter to shareholders on Monday, stating the "dissident
nominees have agreed to accept special incentive payments from
Jana for serving on Agrium's board."
"The truth is that our directors only stand to gain to the
extent that all shareholders gain and each meets the
independence requirements of the CBCA, the NYSE and Agrium's own
governance guidelines," Jana said in the statement.
Agrium last year doubled its dividend and completed a C$900
million ($875.53 million) share buyback amid pressure from Jana.
At a recent analyst meeting, Agrium also provided analysts with
much more detail on its retail arm, addressing another one of
the issues highlighted by Jana.
Jana, however, says that Agrium is attempting to address the
points it has raised around capital allocation, disclosure and
relevant board experience "without having to embrace actual
Agrium fired a salvo back in its letter to shareholders,
saying, "The bottom line is this: Jana's campaign isn't about
corporate governance, operating performance or board experience.
It is a Trojan Horse tactic aimed at securing board seats that
Jana can then use to further its agenda of breaking up Agrium.
Agrium shares were down 2.27 percent at C$105.03 on the
Toronto Stock Exchange. The company's New York-listed shares
were down 2.29 percent at $101.99.