Agrium Appoints Two Directors After Breakdown of Talks

Agrium Inc., the Canadian fertilizer producer under pressure from activist shareholder Jana Partners LLC, named two non-executive directors to its board after the breakdown of talks to avert a proxy fight.

Agrium appointed Mayo Schmidt, the former chief executive officer of Canadian grain handler Viterra Inc., and David Everitt, a retired Deere & Co. executive, the Calgary-based company said yesterday in a statement.

Jana has sought to replace five of Agrium’s 11 directors with its own nominees, citing a lack of experience in farm-product retailing and distribution on the current board, and has proposed the company spin off of its retail network, the largest in North America, to boost profitability. The New York-based hedge fund is Agrium’s largest shareholder with a 6.2 percent stake, according to data compiled by Bloomberg.

Agrium said it held three days of talks with Jana prior to the appointment of Schmidt and Everitt. It said the fund initially agreed to drop its demand for a breakup in return for naming a director to Agrium’s board.

“At the last minute, Jana reneged and insisted on two director nominees,” Agrium said. “As a result, discussions terminated.”

Agrium “continues to refuse to acknowledge the need for independent voices on its board,” Jana said yesterday in a statement in response to the Agrium announcement.

‘Performance Issues’

Jana said it ended discussions with the company when Agrium “refused to commit itself to addressing any of the performance issues identified by Jana, and also revealed the names of new directors who Jana believes are insufficient to address the Agrium board’s deficiencies.”

“It does seem that Agrium is being responsive to the concerns and needs of investors,” John Chu, a Toronto-based analyst at AltaCorp Capital Inc., said today in a telephone interview. “We expect that this should appease a lot of them, but obviously not Jana.”

Agrium fell 2 percent to C$112.71 in Toronto. The shares, which reached an intraday record of C$116.38 on Jan. 28, have climbed 37 percent in the past 12 months.

Jana’s nominees to Agrium’s board are the fund’s co-founder and managing partner Barry Rosenstein; David Bullock, a former chief financial officer of Graham Packaging Inc.; Stephen Clark, the former CEO of German chemicals distributor Brenntag AG; MSC Industrial Direct Co. Chairman Mitchell Jacobson; and Lyle Vanclief, a former Canadian minister of agriculture.

Agrium director nominee Schmidt left Viterra after the company was acquired by Glencore International Plc in December. Before his retirement, Everitt had responsibility for Deere’s global tractor and crop-care products, according to Agrium’s statement.