JANA Partners Llc., in New York City holds a stake just shy of 5% in Alberta based Agrium Inc. (AGU). Since early summer JANA has argued for structural and operational improvements - including a proposed split of Agrium's wholesale and retail divisions - that they expect would add value for shareholders.
Agrium boasts the largest working inventory of any of the fertilizer giants and this inventory is thought by some to help insulate AGU against market forces. JANA disagrees noting that AGU's shares have performed no better than most uninsulated peers over the last cyclical dowturn and failed to produce on the subsequent upturn. By cutting the excessive inventory, JANA believes AGU could reduce its reliance on volatile commodities and stabilize retail earnings, enhancing its value.
I spoke to a partner at JANA who affirmed Agruim's commitment to producers but noted that a golden opportunity for value creation is not being realized here and, "at the end of the day, it's up to the shareholders to make the call. We've been in similar situations where companies resisted our calls for change but by making our case to shareholders we were able to prevail and we don't view this situation any differently."
Despite AGU's objections, JANA is undeterred and says the discussion will continue. JANA has made a 700 million dollar bet on the restructuring and has every confidence that shareholders will take advantage of this value creation opportunity.