* Jana names 5-member slate for election to Agrium's board
* Agrium says Jana's attempts are almost certain to fail
* Agrium shares rise more than 2 pct in New York, Toronto
By Euan Rocha
Nov 19 Hedge fund Jana Partners on Monday
escalated its effort to overhaul Canada's Agrium Inc
by nominating a slate of board candidates to buttress its demand
that the fertilizer company split up its wholesale and retail
New York-based Jana, Agrium's largest shareholder, has been
pressuring the fertilizer maker and farm products retailer for
months. It wants Agrium to spin off its retail arm, cut costs,
return cash to shareholders and improve disclosure.
The firm, which owns a 6 percent stake in Agrium, named its
managing partner, Barry Rosenstein, and four independent
nominees for election to Agrium's 11-member board. The move sent
shares in Agrium up more than 2 percent on Monday.
"Jana believes that these individuals will add critical
oversight to a board that for years has tolerated suboptimal
capital allocation, failure to manage costs, structural issues,
lack of transparency, and share price underperformance," the
hedge fund said in a statement.
The proxy fight is the latest in a series of high-profile
battles led by activist investors seeking to shake up the
management of leading Canadian companies. Earlier this year,
investor William Ackman, using tactics similar to those employed
by Jana, succeeded in installing his hand-picked candidate as
chief executive of Canadian Pacific Railway Ltd.
The main point of contention between Jana and Agrium is
whether a retail spin-off would create value for shareholders.
Agrium contends its strategy of integrating its wholesale and
retail arms helps provide steady earnings, even during downturns
in the volatile agricultural sector.
Agrium Chief Executive Mike Wilson said he was confident the
Jana proxy fight would fail.
"Jana has been trying for over six months to obtain support
for its idea that Agrium should spin off or sell its retail
operations. Agrium's shareholders have overwhelmingly rejected
Jana's ideas," Wilson said in a statement. "As a result, we
believe Jana's attempt to run its own slate for Agrium's board
is almost certain to fail."
Agrium already owns the biggest network of farm retail
stores in the United States, where it sells fertilizers, seeds
and crop protection chemicals. It is in the process of expanding
its retail presence in Canada via the acquisition of retail
stores that Glencore is selling following its takeover
of Viterra Inc, a grain handler and farm products
Jana initially disclosed it that had acquired a stake in
Agrium in August, weeks after it had already begun to meet with
shareholders and analysts to argue the merits of a spin-off.
Agrium has steadfastly refused to consider spinning off its
retail arm, while seeking to placate disgruntled shareholders by
raising its dividend this year and completing a share buyback.
Agrium's shares have risen more than 40 percent this year -
which each side says bolsters its own case for what's best for
Alta Corp analyst John Chu said the company has also begun
to provide increased transparency in reporting operational
efficiencies for its retail division.
"Jana's continued investment in Agrium should bode well for
the stock as we expect this to yield more transparency for the
retail segment going forward, regardless of whether Jana is
eventually successful in appointing new members to Agrium's
board," said Chu in a note to clients.
Agrium's U.S.-listed shares were up 2.7 percent at $100.19
in midday trading. Its Toronto-listed shares were up 2.1 percent
Jana, a top U.S. activist investor, has won high-profile
campaigns at companies such as Marathon Petroleum Corp
and McGraw-Hill Cos Inc. It said its proposed nominees
for Agrium's board bring a lot of experience to the table.
In addition to Rosenstein, Jana's slate includes David
Bullock, Stephen Clark, Mitchell Jacobson and Lyle Vanclief.
The fund said Bullock was formerly chief financial officer
and chief operating officer at United Agri Products, now a part
of Agrium's retail arm. Clark and Jacobson are former chief
executives of companies that Agrium has cited as peers of its
Final independent nominee Lyle Vanclief is a former Canadian
minister of agriculture and a former member of parliament.
Scotiabank analyst Ben Isaacson said he is watching for a
negotiated settlement between the two sides, before a mid-2013
proxy contest ensues.
"We continue to believe that while some of Jana's criticisms
are valid, others, such as Agrium's underperformance, are
overstated. We also think that some of Jana's proposed fixes
offer no certainty of enhanced value realization, especially a
retail-wholesale split," said Isaacson in a note to clients.