Agrium forced into the proxy ring – by Boyd Erman (Globe and Mail – November 19, 2012)

Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

Another large Canadian company is facing a battle in the boardroom, as the biggest shareholder of Agrium Inc. attempts to replace almost half of the company’s directors as part of a campaign to break up the business.

Jana Partners LLC, a New York hedge fund, is proposing a slate of five new directors for Agrium’s 11-person board, including three corporate executives and a former Canadian agriculture minister. The fifth nominee is Jana’s founder, Barry Rosenstein.

Calgary-based Agrium owns a global network of facilities where it makes fertilizer, and also has a network of farm-products stores in Canada, the United States, Australia and South America.

For months, Jana has criticized Agrium for what it says are elevated expenses and poor use of capital, and has argued that shareholders would be better off if the farm stores were split into a separate company. Agrium has resisted that idea.

The prospect of a proxy fight raises the stakes, and to help its cause, Jana has also increased its stake in the company to 6 per cent from 4 per cent. Agrium joins a growing list of big Canadian companies that have become targets of activist investors, shaking a sense of invulnerability in the boardrooms of the Canadian corporate establishment.

U.S. hedge fund manager Bill Ackman successfully took on Canadian Pacific Railway Ltd., sparking an overhaul of the board and management. A Canadian hedge fund manager, Greg Boland, won a seat on the board of Maple Leaf Foods Inc., while hardware seller Rona Inc. is now embroiled in a proxy battle with an investor who wants to oust all its directors after they rebuffed a takeover offer from U.S. rivals Lowe’s Cos Inc.

Jana has been steadily increasing the pressure on Agrium over recent months. First, the fund worked behind the scenes to rally support among large shareholders and analysts, before beginning a public offensive later in the summer. Mr. Rosenstein then made Agrium his topic last month at a presentation to the Value Investing Congress, a closely watched gathering where well-known investors present their best ideas.

In addition to criticisms of Agrium’s structure and performance, Jana has sought to paint a picture of Agrium as unresponsive to shareholder concerns. The hedge fund has accused Agrium of trying to mislead investors about the value of the retail business by switching the companies it used as comparisons.

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