Agrium warns shareholders of JANA’s tactics to break up company

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Agrium Inc. announced that it has commenced mailing its Proxy Circular in advance of the Annual General Meeting of Shareholders that will take place in Calgary, Alberta on April 9, 2013.

The proxy circular includes a letter to Agrium shareholders from Board Chair Victor Zaleschuk, a copy of which is included below, as well as detailed reasons why Agrium shareholders should vote for Agrium’s Board slate, using only the WHITE proxy.

“This is a simple choice between Agrium’s highly successful strategy that has delivered two consecutive years of record financial results and generated a 467%1 shareholder return since 2005, versus JANA Partners’ ill-conceived scheme to break up the company and take other actions that will destroy shareholder value,” said Victor Zaleschuk, Board Chair. “Agrium shareholders need to act today to protect the value of their investment by voting for Agrium’s Board nominees.”

Letter to Shareholders from Agrium’s Board Chair

The following letter was included in the proxy materials mailed to shareholders:

Dear Agrium Shareholder:
You have an important decision to make that will affect the value of your investment in Agrium.

This year’s election for the Board of Directors has become a choice between two competing visions for Agrium’s future. One vision is endorsed by Agrium’s Board and management, and has the support of an overwhelming majority of Agrium’s large institutional shareholders and the equity research community.

This vision would have Agrium continue to execute the integrated strategy that has delivered a 467% shareholder return and made Agrium one of the best performing stocks in North America since 2005. This strategy has produced two consecutive years of record earnings, and increased earnings from Agrium Retail by more than 50% since 2010. This performance, in turn, has made it possible for the Board to fulfill its long-standing plan to raise the dividend (which we have by 18x since 2010) as earnings and cash flow have increased. It is the strategy that has uniquely positioned Agrium to strike a deal to acquire from Glencore the agri-products business formerly operated by Viterra and return Cdn$900-million to shareholders in October 2012 in connection with Glencore’s sale of a stake in the Medicine Hat nitrogen facility. Moreover, it is the strategy that has enabled Agrium to achieve a leading position in the global agricultural inputs sector and increase its market value by over $14 billion2, or 700%, since 2003.

The other vision is being promoted by a New York-based activist hedge fund called JANA Partners. JANA wants Agrium to abandon its current strategy, break itself into three small pieces, and take other actions that will destroy shareholder value. We have said we are not going to do that. So, to further its flawed agenda, JANA has put forward its own dissident slate of director nominees.

It is very important for you to ACT TODAY to protect the value of your investment in Agrium. Vote FOR the Agrium Board nominees on the WHITE form of proxy and disregard the materials you receive from JANA.

JANA’s Goal Is To Break Up Agrium

JANA first contacted Agrium in May 2012 and demanded we spin off Agrium’s Retail business and spin off our Potash operations, breaking Agrium into three small companies. JANA also demanded we reduce Retail working capital and corporate costs to levels that would significantly impair Agrium’s profitability and damage Agrium’s ability to manage its global operations.

While our Board has evaluated Agrium’s corporate strategy and structure many times in the past, the Board has taken JANA’s concerns seriously. We immediately engaged an independent financial advisor and independent legal counsel to advise the independent directors of the Board on the value of a break up, along with all of JANA’s other demands. After an in-depth, two-month review, the independent directors concluded that JANA’s break-up plan and its other demands would destroy shareholder value and were contrary to the best interests of the company and its shareholders. The Board has reviewed each successive argument JANA has made and continues to be of the view that JANA’s demands would destroy value and are not in the best interests of Agrium and its shareholders.

JANA’s latest message is to convince Agrium shareholders that it is really only concerned with the level of experience on Agrium’s Board. We don’t believe it and neither should you. If that were JANA’s concern, it would have supported the recent appointments to Agrium’s Board of David Everitt and Mayo Schmidt, two highly-accomplished and independent executives with precisely the extensive agricultural, retail and distribution expertise that JANA says Agrium needs.

JANA’s Dissident Nominees: Bought and Paid For?

It is important to note that JANA’s dissident nominees have agreed to accept special incentive payments from JANA for serving on Agrium’s Board. These payments are structured to incentivize short-term actions, even if they are taken at the expense of greater long-term value. This kind of “golden leash” arrangement is unheard of in Canada and raises serious questions about the independence of JANA’s nominees, and their ability to act in the best interests of all shareholders.


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