* Jana wants breakup, other improvements
* Proxy battle looming in May
By Rod Nickel
Feb 7 Canadian fertilizer company Agrium Inc
has failed to prove that it should keep its two main
divisions together, and also needs to cut costs and use capital
more effectively, activist shareholder Jana Partners said on
Jana, the largest Agrium investor with 6 percent of
shares, was rebutting a presentation the company made to
sell-side analysts on Jan. 28.
"Nothing in Agrium's responses refutes the overall picture
of a company that has historically been undervalued and
underperformed its peer-weighted average, and that can unlock
that value by addressing fundamental issues with the help of our
highly qualified nominees," said Jana managing partner Barry
Agrium could not immediately be reached for comment.
Jana has nominated five candidates to Agrium's 11-member
board, setting up a proxy battle at the company's annual meeting
in May or potentially sooner.
The New York hedge fund wants Agrium to spin off its farm
retail division, the largest in the United States, which sells
seed, fertilizer and chemicals to farmers. Jana argues that the
retail arm is undervalued within an integrated structure with
Agrium's wholesale division that mines potash and phosphate and
makes nitrogen fertilizer.
Agrium has said that keeping retail and wholesale operations
within one company produces synergies. The retail stores' direct
contact with farmers, for example, helps its wholesale side make
decisions on fertilizer production.
But Jana said those synergies are unproven and that Agrium
has tried to hide how undervalued the retail division is within
the company's share price, suggesting to the hedge fund the need
for an unbiased review of the integrated structure.