01 April 2013 20:21 [Source: ICIS news]
HOUSTON (ICIS)--Ahead of next week’s board of directors vote, hedge fund Jana Partners accused Canadian fertilizer producer Agrium on Monday of using shareholder money to pay brokers and investment advisers to cause their clients to vote for Agrium’s board nominees.
In a press release, Jana said it has obtained a private memorandum sent by Agrium to brokers and investment advisers that sets the terms of “this vote-buying strategy”.
According to Jana, the memo states: “Agrium will pay members of the Soliciting Dealers Group who facilitate the voting of shares by retail beneficial owners of shares resident in Canada, a fee of [Canadian dollar] C$0.25 per share for each share voted in favour of the Agrium Nominees, provided that the fee in respect of any single beneficial owner of shares shall not be less than C$100 (provided such beneficial owner holds a minimum of 30 shares) or more than C$1,500. No solicitation fees will be payable if the slate of Agrium Nominees are not elected in full to the Board …”
Agrium, through its spokesperson Robert Siegfried, called Jana’s comments “baseless”.
"This is an important election for Agrium shareholders, and we want to ensure all shareholders are properly informed. Dealer solicitation groups are commonly used in contested situations in ?xml:namespace>
“We note that Jana has also said it may also use a dealer solicitation group and has disclosed that it is spending significant sums of money to solicit Agrium's shareholders,” the company said.
“Jana can rest assured the cost of this exercise is far less than the cost Agrium shareholders would have to bear if Agrium were to abandon a winning strategy and destroy value through Jana’s ill-conceived break-up plan,” the company said.
Jana called the alleged Agrium memo “entirely inappropriate” and said that it belies Agrium’s assertion that it has broad shareholder support.
Jana also urged Agrium shareholders who receive voting advice from brokers or investment advisers to ask if they are being financially compensated by Agrium.
"The disdain for the voice of shareholders and willingness to squander millions of dollars of shareholder capital for board self-preservation that this demonstrates is stunning," said Jana managing partner Barry Rosenstein. "Equally stunning is Agrium's hypocrisy, given their claims of supposed broad shareholder support.”
Shareholders will vote on 9 April for the board of directors 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.
Since the onset of the proxy battle, the crux of Agrium’s stance has been a consistent rejection of Jana’s assertion that the company is being mismanaged and has misrepresented overall performance to shareholders.
The hedge fund has also challenged the company to break apart its retail sector from the wholesale fertilizer segment based on their viewpoint that it has underachieved. As the largest shareholder with a 7.5% stake, Jana has additionally campaigned for the replacement of board members with their five nominees.
Jana asserts the retail distribution, which directly sells seeds, chemicals and fertilizers to farmers, has failed to meet its potential despite spending $4bn (€3.1bn) on acquisitions.
($1 = €0.78)
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