Agrium Evades ‘Genuine Debate’ on Farm Retail Arm, Jana Says

Agrium Inc., the agricultural retailer and fertilizer producer, is avoiding a “genuine debate” over the company’s performance, said Jana Partners LLC, the hedge fund pushing for the spinoff of Agrium’s agricultural retail arm.

Jana, Agrium’s largest shareholder, has been urging the Canadian company since May to break off its network of farm supply stores, the largest farm chain in Canada and the U.S., and to make other changes that the fund said may add as much as $50 of value to each Agrium share.

“It’s time to stop avoiding this discussion and embrace solutions to Agrium’s long-term undervaluation and underperformance,” Jana Managing Partner Barry Rosenstein said today in a statement.

Rosenstein’s assertion is the latest volley between the two companies over the proposed separation of the retail operations from Calgary-based Agrium’s so-called wholesale fertilizer arm. Jana, based in New York, also is urging Agrium’s management to improve disclosure, boost capital returns and reduce costs and working capital, Rosenstein said Oct. 1 in an investor presentation.

Agrium’s board and Chief Executive Officer Mike Wilson have rejected Jana’s demand for a spinoff, saying the move would be too risky and offer no sustainable benefits to its investors.

“Agrium has thoroughly addressed Jana’s arguments through public filings, extensive discussions with shareholders and analysts and also directly with Jana,” Richard Downey, vice president of investor and corporate relations said in e-mail in response to Rosenstein’s statement. “There are major flaws in Jana’s analysis and conclusions.”

Share Performance

Agrium contends that Jana understates Agrium’s share price performance against its peers by using an end date of June 1 rather than the latest date, according to a presentation updated Oct. 5. Agrium says that Jana incorrectly compares the performance of Agrium’s Canadian-dollar shares to the U.S. dollar-denominated shares of its fertilizer industry peers.

Rosenstein suggested in an investor presentation accompanying today’s statement that Agrium shares have been helped by his public campaign to improve the company’s performance and by a drought in parts of the U.S. that has spurred grain prices to record highs.

“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,” Rosenstein said in today’s statement.

Agrium’s U.S. shares have risen 8.1 percent since Jana’s proposal became public Aug. 13 while CF Industries Holdings Inc., North America’s largest maker of nitrogen-based fertilizer has gained 2.5 percent.

Agrium is up 55 percent this year in New York, compared with CF’s 48 percent.

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