JANA Partners Calls On Agrium To Join The Discussion On Unlocking Agrium's
True Value Potential
NEW YORK, Oct. 16, 2012
NEW YORK, Oct. 16, 2012 /PRNewswire/ --JANA Partners LLC today called on
Agrium Inc. ("Agrium") (TSX / NYSE: AGU) to issue substantive responses to the
structural and operating issues raised by JANA, and called the responses
issued by Agrium to date incomplete and in many cases misleading. JANA, which
is Agrium's largest shareholder, recently released a detailed analysis of the
factors which have led to Agrium's undervaluation and underperformance, and
steps to unlock Agrium's hidden value, including a larger and more consistent
return of capital, improving disclosure, a working capital and operational
cost reduction plan, rationalizing unallocated corporate overhead and
separating Agrium's "Retail" and "Wholesale" businesses.
Today JANA released a new presentation (both presentations can be found at
www.JanaAGUanalysis.com) detailing Agrium's responses to the issues JANA has
raised. In this analysis, JANA notes that Agrium has sought to narrow the
playing field by responding only to select issues, and its responses to even
those limited issues have often been misleading or incomplete.
oUndervaluation and Underperformance: Misleading response - Agrium has
sought to erase its historical share price underperformance using
short-term results which have been impacted by JANA's engagement and other
exigent factors. Agrium has also failed to offer any defense of its
switch to new lower multiple comparable companies to value its Retail
business after years of arguing for higher multiple comparables.
oLack of Fit Between Retail and Wholesale Businesses: No substantive
response – Instead, Agrium simply claims shareholder support for the
status quo on this one issue. While JANA disputes this claim, JANA also
expressed confidence that even shareholders who may currently support
Agrium's structure will stop if Agrium fails to offer any synergies of its
structure that can withstand scrutiny.
oHigh Cost of Current Structure: Misleading response - Agrium's responses
fail to put its historical overhead cost growth in the proper perspective
and sets an unacceptably low bar for cost management.
oSuboptimal Capitalization & Capital Allocation: Partial response - Agrium
has improved its capital return profile following JANA's engagement, but
has yet to commit to sustained improvement, and has not addressed the
impact of its structure on capital allocation.
oPoor Retail Disclosure: No response.
oBoard's Lack of Legitimate Retail Distribution Experience: No response.
oFailure to Manage Working Capital: Misleading and incomplete response -
Agrium's responses are either easily refutable or lacking in sufficient
detail to evaluate.
oFailure to Manage Retail Costs: Misleading response - Agrium has offered
new disclosure giving a snapshot of its cost management, yet the broader
trend of cost management relative to peers confirms JANA's point that
unlike its peers Agrium's growth has failed to translate into operating
"Agrium has tried everything but making a compelling argument for the status
quo," said JANA Managing Partner Barry Rosenstein. "While the company may
dispute narrow elements of our analysis, nothing they have said refutes the
overall picture of undervaluation and underperformance relative to Agrium's
true potential. It's time to stop avoiding this discussion and embrace
solutions to Agrium's long-term undervaluation and underperformance."
For more info contact JANA Partners LLC at (212) 455 0900
SOURCE JANA Partners LLC
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