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TORONTO • Agrium Inc. was confident from the start. When activist investor Jana Partners LLC launched a proxy battle against the Calgary-based company last November, chief executive Mike Wilson said the effort was doomed to fail.
He dismissed Jana’s arguments as nonsense, and said he had support from the vast majority of Agrium shareholders. His confidence was bolstered last month when a number of key institutions announced their support for the current board.
But on March 26, one event re-wrote the terms of the battle. Proxy voting firm Institutional Shareholder Services (ISS) released a report recommending that clients elect two of Jana’s five dissident nominees to Agrium’s board: Jana founder Barry Rosenstein and former agribusiness executive David Bullock. Suddenly, Jana had a major talking point in its favour.
It wasn’t just the ISS recommendation that surprised Agrium. The report itself read like a press release for Jana, as the firm ripped Agrium’s corporate governance and suggested the board may have a “burgeoning credibility problem.”
The vicious proxy fight will finally be decided on Tuesday in Calgary, as directors will be elected at Agrium’s annual meeting. Given that both sides have declared victory at various times, someone is going to come out of the meeting looking bad.
Jana said on Monday that both Mr. Rosenstein and Mr. Bullock appear to have enough votes to get elected to the board. If true, it suggests that the ISS report had an outsized impact on the battle, as those were the only dissident candidates it supported. There has been speculation among analysts and investors that Jana’s central strategy was to win ISS backing.
On the other hand, Jana said it always had strong shareholder backing, even though it did not receive public support from key investors as Agrium did.
“The company tried to paint a picture that the ISS recommendation was this crazy thing that came out of left field, which isn’t the case,” Jana executive Charles Penner said in an interview. He added that a number of sell-side analysts said positive things about Jana’s nominees, including those at Credit Suisse and CIBC World Markets.
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