27 March 2013 16:42 [Source: ICIS news]
HOUSTON (ICIS)— Jana Partners announced on Wednesday that proxy advisory service firm Institutional Shareholder Services (ISS) has decided to endorse two of the activist hedge fund’s nominees for election to the board of Canadian fertilizer producer Agrium.
The two candidates supported by ISS are Jana managing partner Barry Rosenstein and David Bullock, a former executive with United Agri Products. Jana currently has proposed five candidates for the board.
ISS stated in a report that Jana has made a compelling argument for their inclusion in the leadership of the company, and that despite Agrium’s stance that the hedge fund is determined to break apart the company, the firm believes Jana’s participation will benefit all the shareholders.
“The gnawing question is not whether the company should spin off its distribution business but whether a board still loudly repudiating the very changes it has begun to implement, changes which have encouraged many shareholders and analysts, is a board with a burgeoning credibility problem. Shareholders may well wonder if, once the bright lights of this proxy contest are turned off, the progress will fade as well,” said ISS.
Jana has invested approximately $1.2bn (€0.9bn) in Agrium, resulting in 7.5% stake in the fertilizer producer. Its position that the current leadership has misrepresented its performance and has called for the company to break its retail sector away from the wholesale fertilizer segment.
Jana asserts the retail distribution, which directly sells seeds, chemicals and fertilizers to farmers, has failed to meet its potential despite spending $4bn on acquisitions.
“We are pleased that ISS conducted a detailed assessment of Agrium’s long-term performance, the substantial opportunities for value creation, and the ability of our experienced and independent nominees to help pursue those opportunities for the benefit of all shareholders, and on that basis have recommended that shareholders elect two of our highly qualified nominees to the board,” said Barry Rosenstein, Jana managing partner.
However, Agrium received late Tuesday more support for their side of the ongoing battle from proxy advisor Glass, Lewis &Co., who recommended that their clients vote in favour of the current board of directors,
Agrium criticized the decision of ISS. Board chairman Victor Zaleschuk said Jana has not proven its claims and has no basis to even receive a single board seat.
“In addition to being offside with the equity research community, leading independent governance experts, three other proxy advisory firms and many of Agrium’s largest institutional shareholders, ISS’ decision runs counter to its own published criteria for evaluating short-slate dissident campaigns in Canada,” said Zaleschuk.
“A significant number of large institutional funds have told us they will override any ISS recommendation in favour of Jana and vote instead for Agrium’s board nominees on the white proxy. As with several other situations where ISS has supported dissident slates only to later see those dissident slates defeated by shareholders, we are confident that our shareholders will rightly and roundly defeat Jana’s nominees.”
In addition to Glass Lewis, those who said they are siding with the producer are British Columbia Investment Management, Montreal based investment firm Letko, Brosseau & Associates, US based shareholder advisory firm Egan-Jones, London-based Pensions Investment Research Consultants and Calgary-based Alberta Investment Management Corp.
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.
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