JANA Cries 'Foul' in Scathing Letter

April 11, 2013 09:30 AM

JANA Partners has issued the following release in regards to the recent Agrium shareholder vote. Managing Partner Barry Rosenstein accuses Agrium of unfair play and vote tampering and vows investigation saying, "... this tainted vote isn't the end of the story."

With 11.2 million shares of skin in the game, I didn't expect JANA to go down quietly, but while Rosenstein may be a party to sour grapes, the following message includes a laundry list that levels some serious allegations.

From JANA Partners Managing Partner Barry Rosenstein:

"We are Agrium's largest shareholder by far and no one has a greater interest in seeing Agrium succeed than we do. That's why we pushed for change at Agrium, and we're proud that this push led to significant improvements including the company's first large share repurchase in years, a dividend that increased by four-and-a-half times, and improved disclosure after years of reducing disclosure.

We are also gratified that as of the voting deadline on Friday, we had received 59 million votes for one or more of our nominees, including it appeared enough votes for David Bullock and me to be elected to the board of directors.

We have learned however that after the vote deadline, enough votes for us were apparently revoked to change the outcome. We don't know why otherwise the company would have started lobbying people after the deadline to change their votes.

Usually when an election is over and you have more votes than the other side you have won. Not in the case, however. Apparently offering to pay 25 cents a share was not enough to lock it up.

We intend to investigate the vote changes after the voting deadline and of course the vote buying, and to pursue all appropriate remedies.

From the beginning we attempted to work behind the scenes and collaboratively with management, as we always do. This proved impossible as rather than real analysis from the company we were simply told that our ideas had zero validity and zero support. This obviously has proved to be untrue, as the company has already adopted many of them and we have received significant shareholder support.

We chose to stick to what matters, which is shareholder value creation. Our campaign was solely about another point of view on the direction of the company and how best to unlock unrealized value for shareholders.

We felt that a healthy debate of the issues was a productive exercise for a company that has consistently underperformed a weighted average of its peers and whose margins and ROIC have actually declined despite its growth in scale.

We looked forward to working collaboratively with the board, not divisively.

Unfortunately, management and the Board took a decidedly different tack.

I congratulate you. You are a Board that proved that if you play dirty enough, violate all precepts of good corporate governance, fair play, ethical behavior, and democracy, you can still lose the campaign but then barely manufacture a victory after the voting is supposed to be over.

You are a Board that condoned:

  • Lying about the shareholder support you had,
  • Switching comparables that you came up with yourselves,
  • Hiring a mercenary banker who previously argued against your corporate structure and then argued for it when paid by you,
  • Buying back stock at an inflated price when you knew that an earnings miss was coming,
  • Permitting your management team to threaten shareholders that they would all quit if we got on the Board, which is a violation of Canadian securities law regarding selective disclosure,
  • Attacking me personally as "lucky", a "pain in the ass" and "a New York hedge fund billionaire", whatever that was meant to imply,
  • Changing your proxy materials to falsely claim distribution experience on the board for members who never claimed it before,
  • Surreptitiously moving up the voting date by a month and then, when you didn't like the result, lobbying shareholders to change their votes after Friday's voting deadline passed, and
  • Bribing brokers and financial advisers for favorable votes.                                             

In an era of improved corporate governance, this is the worst example of entrenched, power-hungry at any cost behavior I have ever witnessed.

They say it takes a lifetime to build a reputation and just an instant to destroy it. I will leave it to you to decide what your reputation in the market is now.

The good news is that this tainted vote isn't the end of the story.

We are Agrium's largest shareholder and you will find we are just as vocal and active outside of a proxy contest as we are within it. We will not hesitate to speak up should Agrium go back to its old ways, and we are not going away."



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