WINNIPEG (Reuters) — Activist hedge fund shareholder Jana Partners will take aim at mostly long-serving Agrium Inc. directors in its proxy contest with the Canadian fertilizer company.
The fight is over whether to break up the company and change how it runs its farm retail network.
Jana’s five candidates for the 12-member board will seek to replace former Agrium chair Frank Proto, a 20-year board member, Susan Henry, a director for 11 years, five-year director Derek Pannell and eight-year director Russell Horner. Jana is also targeting former Viterra chief executive officer Mayo Schmidt, whom Agrium appointed recently.
Read Also
Key actions identified to address canola tariffs
Federal and Saskatchewan governments discuss next steps with industry on Chinese tariffs
“These five directors embody the lack of relevant distribution experience, passivity in the face of underperformance, lack of shareholder alignment and entrenchment tactics of Agrium’s board that have caused Agrium to underperform,” managing partner Barry Rosenstein said March 7 in Jana’s proxy circular to Agrium shareholders.
Agrium said Jana is downplaying to shareholders its aim to spin off its retail division, which sells seed, chemicals and fertilizer to farmers, from its fertilizer wholesale business. Agrium also said Jana’s candidates for the board have agreed to accept payments from the hedge fund for serving on Agrium’s board, raising questions about their independence.
“Jana has resorted to attempts to deceive our shareholders because its ever-changing arguments have gained no traction,” Agrium chair Victor Zaleschuk said.
“Jana’s dissident slate of ‘golden leash’ nominees has been commissioned to break up the company and terminate an integrated strategy that has delivered substantial and sustainable value to shareholders.”
Agrium shareholders will vote April 9 for the board of directors at the company’s annual meeting in Calgary.
Shareholders can vote for as many or as few candidates as they want, but can vote only from Agrium’s or Jana’s proxy card. A source close to the company said they can’t mix and match.
There is no requirement that a shareholder vote for the entire slate of either side.
Jana owns 7.5 percent of Agrium, making it the largest shareholder.
BMO Capital Markets analyst Joel Jackson said he expects a settlement to the dispute before a vote takes place, likely involving some Jana representation on the board.
“Investor fatigue has settled in, in our view, and we have seen little hedge fund/(arbitration fund) interest in this dispute,” Jackson wrote in a note to clients.
Jana’s other concerns include costs of the retail operation, Agrium’s use of capital and what it terms a lack of relevant board experience for the retail operation.
