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A battle is quietly brewing over a giant Canadian agricultural fertilizer firm and a New York hedge fund, drawing interest, in part because of similarities to the recent CP Rail proxy fight.
Jana Partners LLC, a $3 billion (U.S.) fund run by Barry Rosenstein, is agitating for change at Calgary-based Agrium Inc., one of the world’s largest agricultural products company.
Agrium, which has a market capitalization of $15 billion, runs a wide-ranging business that includes developing and manufacturing fertilizers to wholesale and retail sales. Jana, with almost a 5 per cent stake is Agrium’s largest shareholder, has called for the company to spin off its retail operations that sell directly to farmers, saying it could deliver better returns to shareholders.
The hedge fund called for similar spinoffs at other companies in which it held a stake including McGraw-Hill Cos. and Marathon Petroleum Corp., which eventually agreed to the changes.
But Agrium responded this week that such a spinoff would be contrary to the best interests of the company and its shareholders.
“We are confident that Agrium shareholders will receive far greater value with less risk under the company’s current strategy,” said Michael Wilson, president and CEO, in a statement issued Tuesday.
External advisers as well as the board of directors carefully studied the idea and agreed unanimously to keep the retail business, said Agrium spokesman Richard Downey in an interview.
In a statement, Jana on Tuesday expressed disappointment, arguing that it continues “to believe that a separation of the retail business would unlock significant long-term value.”
Wilson was to meet with Jana officials in New York on Wednesday, but Downey said it had been scheduled weeks before, with no specific outcome expected.
“It was set weeks ago at the request of Jana,” said Downey. “It’s just a meeting with a shareholder like any other meeting with a shareholder.”
He added Agrium will listen to any suggestions on how to improve the business as it would to any shareholder.
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