Canadian group taking closer look at Agrium's dealer solicitation

03 April 2013 19:07  [Source: ICIS news]

HOUSTON (ICIS)--Officials with Financial Advisors Association of Canada (Advocis) confirmed on Wednesday that the organisation is reviewing fertilizer producer Agrium’s decision to pay brokers and investment advisers to influence their clients in regards to next week’s proxy vote.

Activist hedge fund Jana Partner on Monday raised the level of contention in the ongoing public spat over control of the company by accused Agrium of using shareholder money to influence votes for Agrium’s board nominees.

Jana said they had acquired a memorandum sent to brokers and investment advisors which revealed that Agrium would pay members of the Soliciting Dealers Group a fee of C$0.25 ($0.24) per share for each share voted in favour of the Agrium nominees.

Although the practice is not illegal, and is a strategy occasionally used in shareholder vote contests in Canada, Advocis officials said the action by Agrium has merited a review by the organisation, which is the oldest and largest voluntary association of professional insurance and financial advisers in the country.

“It’s worthwhile having a closer look at this and whether or not this is an appropriate transaction on the part of advisers,” said Greg Pollock, CEO Advocis.

For their part, Agrium has brushed off Jana’s complaint as being baseless and said this attempt was simply a means to connect with investors that they have not been able to reach by more traditional methods. They also pointed out that the hedge fund had indicated they were also considering using a dealer solicitation group to get their votes out.

"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 Canada … to get information to shareholders who otherwise cannot be reached,” Agrium said.

Jana currently has 7.5% stake in the fertilizer producer, and has repeatedly stated that the current leadership has misrepresented its performance and called for the company to break its retail sector away from the wholesale fertilizer segment.

It is their assertion the retail portion, which directly sells seeds, chemicals and fertilizers to farmers, has failed to meet its potential.

The hedge fund wants five of the current board of directors remove and replaced by a slate of candidates they have selected. Agrium has countered that Jana’s intention is to break apart the company under the disguised notion of trying to increasing shareholder value.

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.

($1 = C$1.01)

 


By: Mark Milam



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