Agrium, Jana seek support of proxy firm in battle for shareholders

20 March 2013 22:40  [Source: ICIS news]

HOUSTON (ICIS)--Canadian fertilizer producer Agrium and activist hedge fund Jana Partners have sought the input of US proxy advisory firm Institutional Shareholder Services (ISS) on Wednesday in what is expected to be a vigorous battle for control of Agrium.

After being presented with positions by both sides, and with Jana releasing their arguments publicly on Wednesday, ISS is expected to release its recommendation shortly on whether investors should side with the current board of directors or choose the five nominees presented by Jana, the largest shareholder.

For their part, Agrium has repeatedly dismissed the assertions that the company is being mismanaged, and has stated that it is crucial to the company’s financial health to separate its retail sector of the business from the wholesale fertilizer segment.

Officials with Agrium on Wednesday said they deem the proposed plan by Jana as one that would destroy shareholder value, and that the dissident nominees would not impact positive change.

"Shareholders and proxy governance advisors should contrast Jana's demonstrably false and misleading claims with Agrium's track record of value creation and good governance. The fact that Jana continues to campaign to replace just under half of Agrium's Board with its dissident nominees only further underscores its blind commitment to a break up of Agrium," said Agrium board chair Victor Zaleschuk.

Jana has invested approximately $1.2bn (€936m) in Agrium, resulting in 7.5% stake in the fertilizer producer. It is their position that the company’s leadership has misrepresented its performance because the highly rated share return is not based on excellent strategy or leadership, but the result of the recent boom within the fertilizer industry.

“This debate comes down to whether Agrium’s board would benefit from the experience and focus on shareholder value that our nominees would deliver on behalf of all shareholders,” said Barry Rosenstein, Jana managing partner. “We believe the answer is clearly yes and we look forward to continuing to make our case for value creating change.”

At this time that argument does not appear to have been effective, as British Columbia Investment Management, which holds about 1% of Agrium’s stock, said on Friday that it is siding with Agrium in the ongoing proxy fight.

That was followed by the announcement this week that Montreal-based investment firm Letko, Brosseau & Associates, which holds 1.2% of shares, will be supporting Agrium’s current board.

Letko said it reviewed Jana’s proposal, but found that the proposed business plan and the placement of the alternative nominees would be disruptive to the company. It said Jana’s method of evaluating the company has ignored performance improvements and therefore they have decided to vote all their shares in favour of Agrium.

Shareholders will vote on 9 April for the board of directors at the company’s annual meeting in Calgary, and can vote for as many or as few candidates as they want, but can only select from Agrium’s or Jana’s proxy card.

($1 = €0.78)


By: Mark Milam



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