Jana targets long-serving Agrium directors in proxy contest

Thu Mar 7, 2013 11:42am EST
 
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* Jana also aiming at new appointee Mayo Schmidt
    * Agrium says Jana masking plans to break up company
    * Agrium shares down in early trading

    By Rod Nickel
    March 7 (Reuters) - Activist hedge fund shareholder Jana
Partners will take aim at mostly long-serving Agrium Inc
 directors, in a proxy contest over whether to break up
the Canadian fertilizer company and change how it runs its farm
retail network.
    Jana's five candidates for the 12-member board will seek to
replace former Agrium chairman Frank Proto, a 20-year board
member, Susan Henry, who has been a director for 11 years,
five-year director Derek Pannell and eight-year director Russell
Horner. Jana is also targeting former Viterra Chief Executive
Mayo Schmidt, whom Agrium appointed nearly one month ago.
    "These five directors embody the lack of relevant
distribution experience, passivity in the face of
underperformance, lack of shareholder alignment, and
entrenchment tactics of Agrium's board that have caused Agrium
to underperform," managing partner Barry Rosenstein said on
Thursday in Jana's proxy circular to Agrium shareholders.
    Agrium said that Jana is downplaying to shareholders its aim
to spin off its retail division, which sells seed, chemicals and
fertilizer to farmers, from its fertilizer wholesale business.
Agrium also said earlier this week that Jana's candidates for
the board have agreed to accept payments from the hedge fund for
serving on Agrium's board, raising questions about their
independence.
    "Jana has resorted to attempts to deceive our shareholders
because its ever-changing arguments have gained no traction,"
Agrium chairman Victor Zaleschuk said on Thursday. "Jana's
dissident slate of 'golden leash' nominees has been commissioned
to break up the company and terminate an integrated strategy
that has delivered substantial and sustainable value to
shareholders." 
    Agrium shareholders will vote on April 9 for the board of
directors at the company's annual meeting in Calgary, Alberta.
    Shareholders can vote for as many or as few candidates as
they want, but can vote only from Agrium's or Jana's proxy card
- they can't mix and match, a source close to the company said.
There is no requirement that a shareholder vote for the entire
slate of either side.
    Jana owns 7.5 percent of Agrium, making it the largest
shareholder. Agrium shares dipped 1 percent in Toronto and 0.7
percent in New York in morning trading.
    BMO Capital Markets analyst Joel Jackson said he expects a
settlement to the dispute before a vote takes place, likely
involving some Jana representation on the board.
    "Investor fatigue has settled in, in our view, and we have
seen little hedge fund/arb interest in this dispute," Jackson
wrote in a note to clients.
    Jana's other concerns include costs of the retail operation,
Agrium's use of capital and what it terms a lack of relevant
board experience for the retail operation.