Canadian pension fund says it supports Agrium board

05 April 2013 21:31  [Source: ICIS news]

HOUSTON (ICIS)--With time quickly slipping away to garner shareholder backing in the proxy fight between themselves and hedge fund Jana Partners, fertilizer producer Agrium gained more public support on Friday as Canada Pension Plan Investment Board (CPPIB) announced it is voting for Agrium’s board nominees.

One of the world’s largest pension funds, the CPPIB said that while it believes there are opportunities for the company to improve, it thinks that Jana has failed to make a compelling case for change in leadership at the Canadian fertilizer titan.

Managing assets worth approximately $169.5bn (€130.5bn), the pension fund currently has 0.25% in outstanding stock and appears to have its greatest concern over the plan put forth by Jana to directly pay its slate of candidates should they be elected to the Agrium board.

“This view is supported by the board’s track record in overseeing significant value creation and responsiveness to shareholders. While we agree that opportunities for improvement exist, we are of the view that the dissident’s nominees do not represent the best alternative for optimizing long-term value creation, particularly in light of Jana’s proposed director compensation structure,” the CPPIB said.

Jana, which has a 7.5% stake in the fertilizer producer, has been battling Agrium’s current leadership structure for months over the hedge fund’s assertion that the current board of directors has misrepresented its performance and for the refusal to break Agrium's retail sector away from the wholesale fertilizer segment.

As a result of its dissatisfaction, Jana wants five of the current board of directors removed and replaced by candidates that it has selected. Agrium has countered that Jana’s intention is to break apart the company under the disguised notion of trying to increasing shareholder value.

After news of the vote of support, Jana officials decided to publicly downplay the significance of this latest round of support for Agrium and called attention to the differences in the amount of stock it holds versus the CPPIB's smaller stake.

One aspect that hedge fund decided to not highlight is that the CPPIB is a client of Institutional Shareholder Services (ISS), which last month surprised Agrium when it recommend to its clients to vote for two of Jana’s nominees. The two candidates it supports are Jana managing partner Barry Rosenstein and David Bullock, a former executive with United Agri Products.

In addition to the CPPIB, those that have already come forward to voice their backing of Agrium include US-based proxy advisor Glass Lewis; 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.

The votes will be tallied at Agrium's annual shareholder meeting, set for 9 April in Calgary.

($1 = €0.77)

By: Mark Milam
+1 713 525 2653

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