Jana Partners LLC, the hedge fund pressing Agrium Inc. (AGU) to spin off its farm-supply retail network, raised its stake to more than 6 percent and chose five nominees in preparation for a fight to dislodge the current board.
The nominees include Jana Managing Partner Barry Rosenstein, David Bullock, a former chief financial officer of Graham Packaging Inc., and Stephen Clark, the former chief executive officer of German chemicals distributor Brenntag AG (BNR), the fund said today in a statement. The other two nominees are Mitchell Jacobson, chairman of MSC Industrial Direct Co., and Lyle Vanclief, a former Canadian minister of agriculture.
Jana, Agrium’s largest shareholder, is proposing a tax-free separation of the Calgary-based company’s network of farm-supply outlets from its wholesale fertilizer arm. The New York-based activist fund also has urged Agrium to boost capital returns, improve disclosure and reduce costs and working capital, Rosenstein said Oct. 1 in an investor presentation. A spinoff of the retail arm and other changes may add $50 to Agrium’s share price, Rosenstein said in the presentation.
Agrium CEO Mike Wilson has resisted Jana’s spinoff proposal, saying that retaining the company’s structure and strategy would be best for shareholders.
“Agrium’s shareholders have overwhelmingly rejected Jana’s ideas,” Wilson said in a statement today. “As we have made clear, the breakup of Agrium will destroy value rather than create it.”
Agrium’s board evaluated Jana’s ideas with an independent financial adviser for two months and held discussions with analysts and shareholders, which led to the conclusion to support the company’s current strategy, Wilson said in the statement.
Agrium rose 3.3 percent to C$101.01 at the close in Toronto.
Wilson said Nov. 7 that Agrium has improved its financial transparency, elaborating on data showing returns on operating capital and profit margins. The company also has pledged to report same-store sales twice a year, in the second and fourth quarters.
“Agrium’s future is in the hands of its shareholders,” Rosenstein said in today’s statement. “We believe they will overwhelmingly support change to realize Agrium’s true value.”
Jana oversees about $3.5 billion in investments and commitments and has proposed similar spinoff plans to McGraw- Hill Cos. and Marathon Petroleum Corp. (MPC:US) Jana had a 4.9 percent stake in Agrium at the end of the third quarter, according to a Nov. 14 filing.
As well as selling seeds, fertilizer and herbicides to farmers, Agrium produces crop nutrients such as ammonia, potash and phosphorus.
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