Jana taking case for Agrium breakup to Canada

Activist shareholder Jana Partners LLC said Wednesday it is taking its case for splitting up Agrium to the fertilizer company’s Canadian investors, just ahead of an Agrium move to solidify its support among sell-side analysts.

Jana, a New York-based hedge fund, wants Agrium to split its farm retail division from its wholesale operations and make other changes to improve returns to shareholders.

Agrium, headquartered in Calgary, has steadfastly refused to consider spinning off its retail arm while seeking to placate disgruntled shareholders by raising its dividend last year and completing a share buyback.

"Agrium’s board has been living in an alternate universe where shareholders have no desire to explore the many ways we’ve identified to unlock value," said Jana managing partner Barry Rosenstein, one of the hedge fund’s candidates for Agrium’s board.

"All along we have been speaking to shareholders and seeing a much different picture, with just about every shareholder we speak to wanting to see a serious discussion of these issues and a large and growing number who support enhancing the board so Agrium can reach its full potential."

Jana owns six per cent of Agrium, making it the biggest shareholder of the widely held company.

Agrium has said Jana’s efforts have gained no traction with investors. A spokesperson could not be immediately reached.

Agrium management is scheduled to give a presentation on its strategy on Monday in New York to sell-side analysts, including a review of its retail division.

Jana’s tour of Canadian investors, who make up an estimated one-third of Agrium’s shareholders, will also include Jana’s five candidates for Agrium’s 11-member board.

The hedge fund said it will zero in on five issues it has raised that Agrium has not fully addressed:

  • conducting an unbiased review of Agrium’s structure
  • changing up the board
  • making better use of capital
  • controlling retail and corporate costs, and
  • improving disclosure to shareholders.

Agrium contends its strategy of integrating its wholesale and retail arms helps provide steady earnings even during downturns in the volatile commodity sector.

In an Oct. 1 presentation to an investor conference, Jana said Agrium’s share price could rise by about $50 if the company took steps to improve its business. The U.S.-listed stock closed that day at $105.53.

Agrium’s New York shares rose Wednesday to a fresh 4-1/2 year high of $110.88. Jana issued its statement after the close.

– Rod Nickel is a Reuters correspondent in Winnipeg.