New York activist hedge fund Jana Partners LLC is lambasting Agrium Inc. for scheduling its annual shareholder meeting a month earlier than usual.
The fertilizer giant normally holds the event at its suburban Calgary headquarters in early to mid-May, but announced last Friday it would take place on April 9 this year.
In an open letter to Agrium shareholders on Wednesday, Jana says the timing of the meeting appears to be “an attempt to cut short” a debate over the company’s strategy.
“While we are confident that this move is too little, too late, it further paints a picture of serious governance issues at Agrium,” Jana said in the missive.
In a release, Agrium board chair Victor Zaleschuk said Jana has been running its campaign for more than eight months.
“We are holding our annual general meeting a month earlier than usual to bring this matter to a close. We remain confident that we have overwhelming shareholder support,” he said.
“Agrium’s board has given Jana’s ideas due and thorough consideration and we have rejected them. Jana’s analysis is flawed, and its ideas would destroy shareholder value.”
Jana has invested more than $1-billion (U.S.) in Agrium, making it the company’s largest shareholder with a 6.5-per-cent stake.
Agrium is set to announce its fourth-quarter and 2012 earnings on Friday.
Jana wants Agrium to better control costs, more effectively manage capital and seriously consider breaking off its retail segment, in which it sells fertilizers, seeds and other products to farmers, from the wholesale part of the business.
The fund wants to appoint five directors to Agrium’s board. Its slate includes Jana managing partner Barry Rosenstein, former Liberal agriculture minister Lyle Vanclief and three men with the executive experience in distribution that the fund says is lacking on Agrium’s board.
Last week, Agrium put forward two of its own candidates, former Viterra Inc. CEO Mayo Schmidt and former Deere & Co. executive David Everitt.
Agrium said it had been close to reaching a compromise with Jana to put an end to what has become a bitter proxy fight, but that the hedge fund “reneged” at the “last minute.”
Jana takes issue with that version of events, saying a “fortress mentality was on display” during the talks, “with Agrium demanding at one point that we drop all of our issues in exchange for merely proceeding with talks, and refusing to even speak to our nominees.”
In Wednesday’s letter, Jana said neither Schmidt nor Everitt have the adequate distribution experience that Agrium needs and were “pre-screened to ensure compliance with the status-quo.”
Schmidt was CEO of Viterra before it was acquired by Swiss-based commodities giant Glencore. Before the Glencore deal, Viterra itself came under pressure from its largest shareholder – pension fund manager Alberta Investment Management Corp. – to improve its performance.
Jana also noted that Viterra’s distribution business was relatively small in the context of the whole company, and that it “served primarily to advance the grain handling business.”
In order for the Glencore-Viterra deal to satisfy the Competition Bureau, Agrium ended up purchasing Viterra’s distribution business, suggesting that Agrium “did not cast a very wide net” in appointing Schmidt to the board, Jana said.
While Everitt has experience in selling farm equipment to dealers, Jana said there’s a “crucial gap” when it comes to dealing with third-party manufacturers.
“We believe the board should be saying yes to these opportunities to unlock Agrium’s full value creation potential, rather than wasting substantial shareholder money fighting them off,” Jana said.
“And we remain confident that once our highly qualified and shareholder-focused director candidates are elected, the board will do so.”