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," Agrium said.

"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.

'False allegations'

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 by Agrium.

'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 space".

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" candidates.

Market reaction

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.