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JANA Responds to AGU -- Nothing New

February 7, 2013
By: Davis Michaelsen, Pro Farmer Inputs Monitor Editor

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"We welcome Agrium's better-late-than-never entry into the debate, and look forward to responding in full to today's (January 28th, 2013) presentation," Barry Rosenstein, the founder and Managing Partner of JANA Partners LLC said in response to Agrium CEO Mike Wilson's strongly worded refute before sell side analysts in New York last month (click here). JANA posted its response today and despite JANA's accusations that AGU has nothing new to add to the debate, the New York hedge fund offers little more than its own rehashed position.

The response outlines JANA's 5C litany that reaffirms the notion that JANA can run Agrium better than AGU's current board and management. The 5C analysis includes costs, controls, capital allocation, conglomerate structure and corporate governance -- all points at which JANA accuses Agrium of failures. The document also includes the list of suggested board candidates that JANA has been peddling, including the nomination of Rosenstein himself.

Agrium has made it very clear that the hedge fund would do well to leave well-enough alone, and that the proposed structural changes and board appointments are out of the question.

A November press release quotes AGU CEO Mike Wilson, “Before reaching the unanimous conclusion to reject a spin off of Retail, the independent directors of the Board spent two months evaluating all of JANA’s ideas with our independent financial advisor. Since that time, our management team has devoted an extraordinary amount of time meeting with our analysts and our shareholders, including JANA, to review our integrated strategy and discuss JANA’s ideas.”

We listen to our shareholders and the overwhelming majority continue to support the company’s position. Over the past year, Agrium has implemented three dividend increases, a Cdn$900-million share buyback and supplemented our retail disclosure. Other than JANA, shareholders are not asking Agrium to consider a Retail spin-off or to evaluate any other structural changes. Shareholders have told us that they invest in Agrium in part because they want exposure to retail and the advantages of our integrated model.”

The activist investor may have already sent its best shot across the bow, and Agrium is quite content to sail on as is. The two seem to have come to an impasse. Without support from shareholders, which is minimal at best, JANA has very little chance of influencing the structure of the company. AGU's attitude suggests JANA will have a hard time breaking into the board. JANA's attitude suggests they intend to keep lobbing rhetoric and appealing to shareholders.

Mike Wilson once again, “The facts are straightforward. Agrium remains committed to its highly successful integrated strategy. JANA has been trying for over six months (going on nine months by now) to obtain support for its idea that Agrium should spin off or sell its retail operations. The fundamental question is whether or not a break-up of Agrium would create compelling, sustainable value for its shareholders. As we have made clear, the breakup of Agrium will destroy value rather than create it.”


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