Jana launches proxy battle, pressures Agrium for change

Mon Nov 19, 2012 2:44pm EST
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By Euan Rocha

(Reuters) - Hedge fund Jana Partners on Monday escalated its effort to overhaul Canada's Agrium Inc (AGU.TO: Quote) by nominating a slate of board candidates to buttress its demand that the fertilizer company split up its wholesale and retail divisions.

New York-based Jana, Agrium's largest shareholder, has been pressuring the fertilizer maker and farm products retailer for months. It wants Agrium to spin off its retail arm, cut costs, return cash to shareholders and improve disclosure.

The firm, which owns a 6 percent stake in Agrium, named its managing partner, Barry Rosenstein, and four independent nominees for election to Agrium's 11-member board. The move sent shares in Agrium up more than 2 percent on Monday.

"Jana believes that these individuals will add critical oversight to a board that for years has tolerated suboptimal capital allocation, failure to manage costs, structural issues, lack of transparency, and share price underperformance," the hedge fund said in a statement.

The proxy fight is the latest in a series of high-profile battles led by activist investors seeking to shake up the management of leading Canadian companies. Earlier this year, investor William Ackman, using tactics similar to those employed by Jana, succeeded in installing his hand-picked candidate as chief executive of Canadian Pacific Railway Ltd (CP.TO: Quote).

The main point of contention between Jana and Agrium is whether a retail spin-off would create value for shareholders. Agrium contends its strategy of integrating its wholesale and retail arms helps provide steady earnings, even during downturns in the volatile agricultural sector.

Agrium Chief Executive Mike Wilson said he was confident the Jana proxy fight would fail.

"Jana has been trying for over six months to obtain support for its idea that Agrium should spin off or sell its retail operations. Agrium's shareholders have overwhelmingly rejected Jana's ideas," Wilson said in a statement. "As a result, we believe Jana's attempt to run its own slate for Agrium's board is almost certain to fail."   Continued...