Shareholder advisory firm Egan-Jones is recommending that Agrium Inc investors vote for the company's board candidates and not those of Jana Partners, the dissident shareholder that wants Agrium to split off its farm retailing unit.
U.S.-based Egan-Jones, the first of several advisory firms expected to issue opinions on the Agrium proxy battle, said on Thursday it believes Agrium's current board provides effective oversight and that Jana has not proved that a change in the board's makeup is warranted.
Shares of Agrium were slightly lower in Toronto and a touch higher in New York. The U.S.-listed stock is down about 4.5 percent over the past 10 days.
Jana has proposed five candidates for Agrium's 12-member board. In addition to splitting off its farm retail division, the fund wants Agrium to improve its use of capital and cut costs, among other changes.
"Our belief (is) that the dissidents have failed to make a persuasive case that a corporate split involving a spinoff of its farm retail division would result in the enhancement of shareholder value," Egan-Jones said in its 25-page report.
Agrium spokesman Richard Downey said the company is pleased with the decision. A source close to Jana said he did not think many shareholders subscribe to Egan-Jones.
Shareholders of the Canadian agribusiness have begun voting, with the proxy battle winding up on April 9 at Agrium's annual meeting in Calgary, Alberta.
Jana is Agrium's biggest shareholder, controlling 7.5 percent of the widely held company.
Shareholder Letko, Brosseau & Associates, which owns about 1.5 percent of outstanding stock, said on Monday that it backs Agrium. Another shareholder -- British Columbia Investment Management Corp -- sided with the company last week. BCIM owns about 1 percent, according to Thomson Reuters data.
(Reporting by Rod Nickel in Winnipeg, Manitoba; Editing by Frank McGurty, Andre Grenon and Dan Grebler)