An attempt by Agrium and its top shareholder, Jana Partners,
to settle their differences ended in acrimony as the fertilizer giant unveiled the appointment of two new
directors, who the activist investment group said failed to make the grade.
Agrium, unveiling that former Viterra boss Mayo Schmidt and ex-Deere
& Co executive David Everitt were to join its board, said that the move
followed the breakdown of an attempt to reach a truce with Jana, which has been
striving to break-up the fertilizer group.
The two groups had for three days discussed a resolution
based on Jana receiving one place on the Agrium board.
However, "after agreeing" to ditching its campaign in return
for a directorship, "Jana reneged and insisted on two director nominees,"
"As a result, discussions terminated."
Michael Wilson, the Agrium chief executive, said he was "disappointed
in Jana's decision to prolong this fight which it is certain to lose," claiming
"overwhelming" support for the group's existing strategy of owning both
fertilizer production and farm retail operations.
However, Jana accused Agrium of making "false allegations",
saying the talks had broken down after the fertilizer giant "refused to commit
to addressing and of the performance issues" the investor has raised.
"Agrium also revealed the names of new directors who Jana
believes are insufficient to address the Agrium board's deficiencies," New
York-based Jana said.
Agrium's "narrow search" for fresh blood had produced two
candidates "who apparently meet management's criteria for board service by
embracing an unquestioned status quo, despite the clear opportunities for value
creation that shareholders have rallied around", Jana said.
Jana's own nominees include Barry Rosenstein, its founder,
Lyle Vanclief, a former Canadian farm minister, and David Bullock, a former
finance director at United Agri Products, a North American farm retailer bought
'Strong, uniquely qualified'
Many investors have raised Agrium's appointment of non-executive
board members with retail experience as a way of undermining Jana's attack, and
potentially leading to a rerating of the group's shares.
Agrium said that Mr Everitt, former president of Deere
regional operations in for North America, Australia and Asia "is intimately familiar
with procurement, marketing and distribution in the global agricultural market
Mr Schmidt, whose reign at Viterra bore "hallmarks" of "strong
shareholder value creation and growth into new markets", was in this role the
head of "the only publicly-traded agricultural retailer of fertilizer, crop
chemicals and seed in North America, other than Agrium".
Agrium described the pair as "two strong, uniquely qualified"
The move received a cautious welcome from broker AltaCorp which.
termed the appointments a "step in the right direction", said that Agrium "should
benefit from the agricultural knowledge" offered by both candidates "in addition
to Everitt's distribution experience on the dealer and equipment side".
The appointments were likely to "appease most investors who
believed the board lacked retail, ag and distribution experience.
"Despite both sides claiming foul, Agrium continues to
address shareholder concerns," the broker said, restating an "outperform"
rating on Agrium shares, with a target price of $124.
However, the shares fell 2.0% to close at Can$112.71 in Toronto.