Agrium (AGU) announced yesterday that it has sent out a Proxy Circular in advance of the Annual General Meeting of Shareholders scheduled on April 9, 2013 in Calgary. The circular includes a strongly worded letter to shareholders from Agrium Board Chairman Victor Zaleschuk regarding ongoing talks with New York City's JANA Partners.
“This is a simple choice between Agrium’s highly successful strategy that has delivered two consecutive years of record financial results and generated a 467% shareholder return since 2005, versus JANA Partners’ ill-conceived scheme to break up the company and take other actions that will destroy shareholder value,” said Victor Zaleschuk, Board Chair. “Agrium shareholders need to act today to protect the value of their investment by voting for Agrium’s Board nominees.”
The letter encourages AGU shareholders to vote in favor of board candidates that support Agrium's current integrated strategy. JANA's aim from the start has been to divide Agrium in such a way as to unlock increased value for shareholders and it has offered a list of it's own board candidates which includes JANA CEO, Barry Rosenstien. The discussion has gone back-and-forth for months now. JANA has since added to its 5% stake in the company, now at 7.5%, or 11.2 million shares.
Analysts do agree that there is potential for value creation beyond what AGU's integrated model currently allows, but executives at the company clearly do not want to tamper with what has worked so well for them in recent years.
The rhetoric in this scathing letter to shareholders calls JANA board candidates 'dissidents' and accuses the nominees of being 'bought and paid for' by JANA.
From the letter, "It is important to note that JANA’s dissident nominees have agreed to accept special incentive payments from JANA for serving on Agrium’s Board. These payments are structured to incentivize short-term actions, even if they are taken at the expense of greater long-term value. This kind of “golden leash” arrangement is unheard of in Canada and raises serious questions about the independence of JANA’s nominees, and their ability to act in the best interests of all shareholders.
The bottom line is this: JANA’s campaign isn't about corporate governance, operating performance or board experience. It is a Trojan Horse tactic aimed at securing board seats that JANA can then use to further its agenda of breaking up Agrium. To that end, JANA has promoted an ever-changing but consistently flawed analysis of Agrium’s track record, business and Board."
Agrium has taken a very aggressive stance against activist investor JANA Partners and with the annual shareholder's meeting seven weeks away, the banter is likely to continue.
The letter from Zaleschuk closes in bold print, "You are invested in a company that has delivered a 467% shareholder return since embarking on its current integrated strategy – a strategy that continues to create record results and significant and sustainable value. JANA wants to abandon that strategy, break the company into three small pieces, and take other actions that will destroy shareholder value.
It is important that you act now to prevent that from happening. Protect the value of your investment in Agrium. Support the continuation of Agrium’s sound and successful business strategy. Please use the WHITE form of proxy today to vote FOR Agrium’s nominees.
We appreciate your continued support.
On behalf of the Board of Directors,
Victor J. Zaleschuk Board Chair"