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JANA Partners Issues Open Letter To Shareholders

Further Information Available at www.JANAAguAnalysis.com 
NEW YORK, Feb. 20, 2013 /CNW/ - JANA Partners LLC today released the following 
open letter to shareholders of Agrium, Inc. ("Agrium") (TSX / NYSE: AGU).  
Agrium announced at the end of the day last Friday that its Annual General 
Meeting of Shareholders will be held on April 9, 2013 and that shareholders of 
record on February 25, 2013 will be eligible to vote. 
February 20, 2013 
AN OPEN LETTER TO AGRIUM SHAREHOLDERS:   Why We Said No to the Status Quo at 
Agrium, and Why You Should Too 
Dear Fellow Agrium Inc. Shareholder, 
We have invested more than $1 billion in Agrium, making us the largest 
shareholder with approximately 6.5% of its outstanding shares, because we 
believe Agrium can generate substantial additional upside for all shareholders 
by addressing 5 core issues:  Costs, Controls, Capital Allocation, 
Conglomerate Structure and Corporate Governance.  Agrium however refuses to 
fully address these issues, and has subverted traditional notions of good 
governance by fighting off our highly qualified independent nominees and 
choosing their own directors merely because we have questioned its performance 
and strategy.  We note that the market has had a swift and negative reaction 
to this refusal to engage, including a 7% share price decline last week after 
Agrium's new directors were announced and our rejection of its insufficient 
settlement offer. 
Upending Notions of Good Corporate Governance.  Agrium has sought to turn 
traditional notions of board oversight of management upside down by making any 
questioning of management's prior performance or strategy a disqualification 
for board service.  When asked recently why Agrium refused to consider our 
candidates, Agrium's CEO responded that "It is not typical to bring someone on 
the board who tells you your strategy is flawed and indirectly tells you 
you're incompetent." (The Globe & Mail, Feb. 4, 2013).  JANA has of course 
never called management "incompetent."  We have simply identified areas of 
substantial opportunity and proposed qualified nominees to help explore them.  
This same fortress mentality was on display in our recent settlement 
discussions, 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. 
This thin-skinned and insular attitude leads us to conclude that Agrium's new 
directors have been pre-screened to ensure compliance with the status quo.  We 
further note that Agrium did not cast a very wide net to locate new board 
appointee Mayo Schmidt, given that Viterra's distribution business was 
acquired by Agrium in a transaction in which he earned over C$30MM.  We also 
note that our board nominees stand to benefit only to the extent that all 
shareholders benefit and each meets the definition of "independence" under the 
CBCA, NYSE rules, and Agrium's own governance guidelines. 
Just last Friday, Agrium doubled-down on its approach, shifting up the usual 
date of its annual meeting by over a month in an apparent attempt to cut short 
this debate.  While we are confident that this move is too little, too late, 
it further paints a picture of serious governance issues at Agrium.  As one 
analyst put it, "Friday after the close at the start of a holiday weekend 
isn't typically when company Boards disclose things they are proud of, but you 
can't fault the Agrium Board for consistency. An abrupt shift in the dates for 
the shareowner meeting looks designed to perpetuate the lack of transparency 
and accountability that seems to be the (very) unexpected legacy of CEO Mike 
Wilson. Investors who have been supportive of Agrium thus far will have to 
think hard about whether this is the sort of behavior they want to encourage 
elsewhere, when they cast their ballots in this accelerated election." (Credit 
Agricole / CLSA, Feb. 19, 2013) 
Refusal to Address Core Issues.  When Agrium approached us seeking a 
settlement, we made clear that for any settlement to occur the board would 
need to commit to conducting a full review of the branch footprint of its 
distribution business ("Retail") and corporate overhead (Costs) and a full 
review of Retail senior management performance objectives (Controls), to 
communicate a targeted dividend payout ratio or some other mechanism to 
clarify ongoing capital return plans (Capital Allocation) and to retain a new 
investment bank to perform a review of Agrium's structure (Conglomerate 
Structure), in addition to adding highly-qualified and independent new 
directors rather than fighting off such change (Corporate Governance).  Agrium 
however refused to commit to even the mildest versions of these concepts. 
Appointing New Directors Who Lack Relevant Experience.  Neither of Agrium's 
chosen new directors addresses the board's lack of distribution experience, 
which is of crucial importance given the size of Agrium's Retail business. 


    --  Mayo Schmidt. While Mr. Schmidt served as CEO of Viterra Inc.
        before it was acquired by Glencore and Agrium, Viterra's
        distribution business accounted for less than 15% of EBITDA and
        served primarily to advance its grain handling business. Agrium
        has also noted significant opportunities for improvement at
        Viterra's distribution business, which calls into question Mr.
        Schmidt's abilities in areas like cost management. We also note
        that like Agrium, Viterra struggled in basic areas of oversight
        and performance including Costs, given Viterra's consistently
        high annual growth rate in corporate overhead, and Capital
        Allocation, given that Viterra executed no share repurchases
        (instead issuing over $2 billion of equity) and initiated a
        small dividend only after coming under pressure from
        shareholders to do so.
    --  David Everitt. Mr. Everitt ran a unit at Deere & Co. that
        manufactured and sold capital equipment to a separate
        independently-owned and operated dealer network. While he has
        experience in agriculture and with manufacturing and supply
        chain issues, he brings no experience in managing true
        "breaking bulk" distribution of primarily third party
        manufactured products, which is a crucial gap given that
        Agrium's Retail business purchases the vast majority of its
        products from third party suppliers and breaks bulk to
        distribute to farmer customers.

By contrast, 3 of our 5 nominees bring more than 75 years of combined 
experience creating substantial value in true "breaking bulk" distribution and 
excellent track records of deploying capital with a true owner orientation.

Questions for Every Shareholder.
    --  Wouldn't a board more concerned with good governance and
        continuous improvement than avoiding criticism have agreed to
        merely fully explore the issues we set forth above, given the
        billions in potential value creation?
    --  Why would the board resist adding a minority of new directors
        who actually have the experience to ask the right questions
        about Retail's operations and strategy?
    --  Why would a board that has spent $4 billion on Retail
        acquisitions that have failed to meet Agrium's minimum return
        hurdle and which failed for years to engage in significant
        shareholder return of capital until pressured to do so refuse
        to simply clarify its ongoing capital return plans?
    --  Why would a board that has overseen a 14% annual growth rate in
        corporate overhead, has a Retail footprint which by Agrium's
        own admission and measurement standards has a glaring degree of
        duplication, and has generated negative operating leverage
        refuse to consider seriously examining its costs?
    --  If Agrium's conglomerate structure truly creates more value
        than a separation, why is the board so resistant to an
        independent and fair review, particularly given the flaws in
        its initial review including manipulating trading comparables
        and hiring advisors who once argued against Agrium's structure
        to now defend it, and given that our nominees will constitute
        only a minority of the board once elected?
    --  Why would a board that has consistently set compensation
        targets for Retail management that prioritize growth through
        acquisitions over profitability refuse to an enhanced review of
        these compensation targets and objectives?
    --  Why would a board that has overseen a litany of corporate
        governance failings including talking down its own value to
        avoid a debate, botching a significant share repurchase,
        accelerating its annual meeting date and more resist adding
        independent and shareholder-oriented new directors?

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, and we remain confident that once our 
highly qualified and shareholder-focused director candidates are elected, the 
board will do so.

Sincerely,

JANA Partners LLC

Information in Support of Public Broadcast Solicitation

JANA is relying on the exemption under section 9.2(4) of National Instrument 
51-102 – Continuous Disclosure Obligations to make this public broadcast 
solicitation.  The following information is provided in accordance with 
corporate and securities laws applicable to public broadcast solicitations.

This solicitation is being made by JANA, and not by or on behalf of the 
management of Agrium.

The address of Agrium is 13131 Lake Fraser Drive S.E., Calgary, Alberta T2J 
7E8.

JANA has filed an information circular containing the information required by 
Form 51-102F5 – Information Circular in respect of its proposed nominees, 
which is available on Agrium's company profile on SEDAR at www.sedar.com and 
at www.JANAAguAnalysis.com.

Proxies for the Agrium shareholders' meeting may be solicited by mail, 
telephone, email or other electronic means as well as by newspaper or other 
media advertising, and in person by managers, directors, officers and 
employees of JANA, who will not be specifically remunerated therefor.  In 
addition, JANA may solicit proxies in reliance upon the public broadcast 
exemption to the solicitation requirements under applicable Canadian corporate 
and securities laws, conveyed by way of public broadcast, including through 
press releases, speeches or publications, and by any other manner permitted 
under applicable Canadian laws.  JANA may engage the services of one or more 
agents and authorize other persons to assist it in soliciting proxies on 
behalf of JANA.  All costs incurred for the solicitation will be borne by JANA.

JANA has entered into agreements with Kingsdale Shareholder Services Inc. 
("Kingsdale") and The Laurel Hill Advisory Group Company ("Laurel Hill") 
pursuant to which Kingsdale and Laurel Hill have agreed to assist JANA in 
soliciting shareholders should JANA commence a formal solicitation of proxies. 
 Kingsdale's responsibilities will principally include advising JANA on 
governance best practices, where applicable, liaising with proxy advisory 
firms, developing and implementing shareholder communication and engagement 
strategies, and advising with respect to meeting and proxy protocol. Laurel 
Hill will be principally responsible for the solicitation of retail 
shareholders and other strategic advice. Pursuant to the agreement with 
Kingsdale, for its solicitation services, Kingsdale would receive a fee in the 
range of $125,000 to $250,000, plus disbursements and a telephone call fee.  
In addition, Kingsdale may be entitled to a success fee on the successful 
completion of JANA's solicitation, as determined by JANA in consultation with 
Kingsdale. Kingsdale will also receive a separate fee for its other services. 
Pursuant to the agreement with Laurel Hill, Laurel Hill would receive a fee of 
up to $100,000, plus disbursements and a telephone call fee. In addition, 
Laurel Hill will be entitled to a success fee of $100,000 on the successful 
completion of JANA's solicitation. All costs incurred for the solicitation 
will be borne by JANA.

JANA is not requesting that Agrium shareholders submit a proxy at this time.  
Once JANA has commenced a formal solicitation of proxies, a registered holder 
of common shares of Agrium that gives a proxy may revoke it: (a) by completing 
and signing a valid proxy bearing a later date and returning it in accordance 
with the instructions contained in the form of proxy to be provided by JANA, 
or as otherwise provided in the final proxy circular, once made available to 
shareholders; (b) by depositing an instrument in writing executed by the 
shareholder or by the shareholder's attorney authorized in writing, as the 
case may be: (i) at the registered office of Agrium at any time up to and 
including the last business day preceding the day the meeting of Agrium 
shareholders or any adjournment or postponement of the meeting is to be held, 
or (ii) with the chairman of the meeting prior to its commencement on the day 
of the meeting or any adjournment or postponement of the meeting; or (c) in 
any other manner permitted by law.  A non-registered holder of common shares 
of Agrium will be entitled to revoke a form of proxy or voting instruction 
form given to an intermediary at any time by written notice to the 
intermediary in accordance with the instructions given to the non-registered 
holder by its intermediary.

To the knowledge of JANA, neither JANA nor any of its managers, directors or 
officers, or any associates or affiliates of the foregoing, nor any of JANA's 
nominees, or their respective associates or affiliates, has: (i) any material 
interest, direct or indirect, in any transaction since the beginning of 
Agrium's most recently completed financial year or in any proposed transaction 
that has materially affected or would materially affect Agrium or any of its 
subsidiaries; or (ii) any material interest, direct or indirect, by way of 
beneficial ownership of securities or otherwise, in any matter currently known 
to be acted upon at the meeting of Agrium shareholders other than the election 
of directors.

JANA Partners LLC, +1-212-455 0900

www.janapartners.com

SOURCE: Jana Partners LLC

To view this news release in HTML formatting, please use the following URL: 
http://www.newswire.ca/en/releases/archive/February2013/20/c7076.html

CO: Jana Partners LLC
ST: New York
NI: FIN AGR 

-0- Feb/20/2013 17:03 GMT


 
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