07 March 2013 23:06 [Source: ICIS news]
HOUSTON (ICIS)--Looking to carve out a spot for their own people on the board of Canadian fertilizer company Agrium, even if it results in a bitter proxy contest, hedge fund shareholder Jana Partners has identified five directors it wants replaced.
New York-based Jana wants the directors ousted and has repeatedly called for a change in the company’s strategy, citing dissatisfaction with Agrium's leadership and management experience while touting their own value as the largest shareholder with 7.5% ownership of the fertilizer producer.
The hedge fund leadership wants Agrium to break its retail sector away from its wholesale fertilizer segment. In a statement issued Thursday, Jana asserted that the retail distribution portion, which primarily sells seeds, chemicals and fertilizers directly to farmers, has failed to meet its potential despite spending approximately $4bn (€3bn) on acquisitions.
It is also claimed that Agrium’s highly rated share price return is not based on a solid course of business strategy or valued leadership but the result of good fortune within the booming fertilizer industry.
“Agrium benefitted from the same commodity and industry tailwinds as peers, yet Agrium meaningfully underperformed an index of its peers by over 60% over the five years before Jana’s engagement,” said Barry Rosenstein, Jana managing partner.
The five candidates Jana wants dismissed from the 12-member board are former Agrium chairman Frank Proto, a 20-year member; Susan Henry, a director for 11 years; Derek Pannell, a five-year member; eight-year director Russell Horner; and the recently appointed Mayo Schmidt, formerly the CEO of Viterray.
“We believe these five directors embody the lack of relevant distribution experience, passivity in the face of underperformance, lack of shareholder alignment and entrenchment tactics of Agrium’s board that have caused Agrium to underperform,” Rosenstein said. “Removing them will lift a burden off Agrium without depriving it of necessary experience or company knowledge.”
Agrium shareholders will vote for its board of directors on April 9 at the company’s annual meeting in Calgary. Shareholders can vote for as many or as few candidates as they want but can only select from Agrium’s or Jana’s proxy card.
Market analysts have begun predicting that due to investor fatigue and the desire to settle the matter without any more public mudslinging that the two sides will reach some sort of settlement that will result in Jana having some representation on the board.
For their part, Agrium officials continue to express their resolve to continue on the course set forth and their disbelief in what they feel is an ill-conceived campaign to break up the company.
“The facts are straightforward. Jana has been trying for over nine months to obtain support for its idea that Agrium should break itself into two or three smaller pieces. Agrium’s shareholders have overwhelmingly rejected Jana’s breakup plan along with its other flawed ideas,” said Victor Zaleschuk, Agrium board chairman.
“It is unfortunate that Jana has chosen to personally attack directors who have impeccable track records as members of a board that continues to oversee significant value creation and which has been recognized for excellence in corporate governance," Zaleschuk said.
($1 = €0.77)
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