Agrium fires back at Jana's plan to split company
Jana, a New York based hedge fund that owns 6 percent of Agrium, said last week that it was meeting in Canada with Canadian shareholders, who make up an estimated one-third of Agrium's ownership. Jana said Agrium has refused to openly discuss all ways to improve the company's performance.
A spokesman for the hedge fund said it intends to comment later in the day.
Along with splitting the wholesale and retail divisions, Jana has said it wants the company to make better use of capital, control retail and corporate costs and improve disclosure to shareholders.
Wilson said keeping Agrium's wholesale side - which produces nitrogen and mines potash and phosphate - combined with its chain of farm retail stores, helps the company understand supply and demand fundamentals, giving it an advantage in a highly competitive sector.
While Agrium said it is wary of releasing too much detail that its privately held competitors could use, the company addressed each of Jana's suggestions.
Jana has raised concerns about the geographic overlap among Agrium's more than 900 farm retail stores in North America. But vice-president of distribution Tom Warner said Agrium has closed 20 percent of its U.S. farm stores in the past seven years, and needs to remain in some areas to win farmers' business.
Jana has also criticized Agrium for maintaining working capital for the retail division at too high a level. Agrium countered by saying that its ratio of working capital to revenues is lower than that of UAP, before Agrium acquired it.
In November, Jana nominated a slate of five candidates to Agrium's 11-member board to buttress its demand that the company split up its wholesale and retail divisions.
"As far as I'm concerned, we've got a fantastic board and an excellent management team," Wilson said. "(Jana's) best decision was buying our stock."
In an Oct. 1 presentation to an investor conference, Jana said Agrium's share price could rise by about $50 if the company took steps to improve its business.