Agrium issues proxy circular, slams hedge fund's break-up plans

Mon Mar 4, 2013 7:36am EST
 
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By Euan Rocha

TORONTO (Reuters) - The war of words between fertilizer maker Agrium Inc (AGU.N: Quote) and its biggest shareholder, Jana Partners, escalated on Monday with Agrium slamming the hedge fund's plan to split the company in a letter to investors ahead of its annual meeting next month.

Calgary, Alberta-based Agrium, which has begun mailing its proxy circular to shareholders ahead of the meeting on April 9, said Jana's plan is an "ill-conceived scheme" that will destroy shareholder value.

The activist U.S. hedge fund, which owns some 7.5 percent of Agrium's shares, has for months demanded a number of changes at the company, including a split between its wholesale fertilizer production arm and its retail business, which sells seeds, crop protection chemicals, fertilizers and other farm products.

Talks aimed at developing a truce between the two sides broke down in February and Jana has proposed five candidates for election to Agrium's AGU.TO 13-member board.

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

Jana, a New York-based hedge fund, has in the past won high-profile campaigns at companies such as Marathon Petroleum Corp (MPC.N: Quote) and McGraw-Hill Cos Inc MHP.N.

TOUGH BATTLE

In the fight with Agrium however, Jana faces an uphill battle convincing fellow shareholders of the merits of its case as Agrium's stock has more than quintupled in value in the last eight years, a fact Agrium repeatedly highlighted in a message to shareholders on Monday.   Continued...