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Jana lambastes Agrium for AGM timing in open letter to shareholders

Lauren Krugel, The Canadian Press

CALGARY - 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 afternoon it would take place on April 9 this year.

In an open letter to Agrium (TSX:AGU) 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.

Jana has invested more than US$1 billion 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.

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 while 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.

"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."

Agrium shares fell 89 cents to $109.20 in mid-day trading on the Toronto Stock Exchange.