Agrium Says Investors ‘Strongly Support’ Existing Structure

Agrium Inc. (AGU), the agricultural retailer and fertilizer producer, said some of its largest shareholders are in favor of retaining the company’s existing corporate structure.

Agrium, based in Calgary, began talking in May with activist shareholder Jana Partners LLC about spinning off its network of farming supply stores and to make other changes that may add $50 of value a share.

“Agrium has recently met with approximately 80 percent of its top 50 active shareholders,” Richard Downey, a spokesman for Agrium, said today in an e-mail. “Over 90 percent have indicated strong support for Agrium’s integrated strategy, with virtually no support for the proposed spin out of retail.”

Jana, Agrium’s largest shareholder, is proposing a tax-free separation of retail operations from its wholesale fertilizer arm. It’s also asking the Canadian company’s management to boost capital returns, improve disclosure and reduce costs and working capital, Jana co-founder Barry Rosenstein said Oct. 1 in an investor presentation.

Downey’s comments may suggest New York-based Jana doesn’t have sufficient support from Agrium’s institutional shareholders for a spinoff, John Hughes, a Toronto-based analyst at Desjardins Securities Inc., said today by telephone.

“If the institutional asset base is in favor of keeping Agrium’s existing structure, it is much less likely that Jana can round up enough retail investors to get the spinoff done,” Hughes said.

Jana questioned Downey’s figures. “Rather than putting out puffed up, unverifiable claims about shareholder support, Agrium should be making a case on the merits and explain why it consistently underperformed its peer-weighted average until we began publicly engaging with them and what it intends to do about it,” Rosenstein said in an e-mailed statement today.

Agrium rose 1.1 percent to C$103.33 at the close in Toronto. The shares have gained 51 percent this year.

To contact the reporter on this story: Christopher Donville in Vancouver at cjdonville@bloomberg.net

To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net

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