Agrium fires back at shareholder aiming to split company

Share buyback, dividend boost unrelated to Jana, Agrium says

Fertilizer and ag retail giant Agrium will not split its wholesale and retail divisions as its biggest shareholder, Jana Partners, wants because it would "destroy value" for shareholders, Agrium’s CEO said on Monday.

Mike Wilson was speaking in New York to Agrium’s sell-side analysts in an attempt to blunt Jana’s move to replace part of Agrium’s board and effect changes it says would increase returns to investors.

Jana preferred to talk to Agrium’s shareholders and analysts rather than to the company itself, despite an understanding last spring that Agrium and Jana would keep talks on improving the company private, Wilson said.

"They’ll say one thing and do the opposite… They’re good at breaking up companies," Wilson said. "They’re very good at saying, ‘Why not just engage some ideas?’ The answer is, if we do, we’ll destroy value for our company, and we’re not about to do that."

Wilson said a share buyback last year, and increases in Agrium’s dividend, had nothing to do with Jana’s pressure.

Jana, a New York-based hedge fund that owns six per cent of Agrium, said last week that it was meeting in Canada with Canadian shareholders, who make up an estimated one-third of Calgary-based Agrium’s ownership.

Jana said Agrium has refused to openly discuss all ways to improve the company’s performance.

Along with splitting the wholesale and retail divisions, Jana has said it wants the company to make better use of capital, control retail and corporate costs better and improve disclosure to shareholders.

Wilson said Agrium would improve disclosure of its retail performance at the New York event, but is also wary of releasing too much detail that its privately-held competitors could use.

In November, Jana nominated a slate of five candidates to Agrium’s 11-member board to buttress its demand that the company split up its wholesale and retail divisions.

Among others, that slate includes former Canadian federal agriculture minister Lyle Vanclief, and David Bullock, a former chief financial officer at UAP, now part of Agrium’s retail wing.

In an Oct. 1 presentation to an investor conference, Jana said Agrium’s share price could rise by about $50 if the company took steps to improve its business.

– Rod Nickel is a Reuters correspondent in Winnipeg.

Related stories:
Jana taking case for Agrium breakup to Canada, Jan. 24, 2013
Richardson cleared to buy into Viterra’s handle, Dec. 20, 2012
Agrium pressured for change in proxy battle, Nov. 19, 2012

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