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Agrium Inc
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Agrium dissident urges vote for its nominees

2013-03-15 12:51 ET - Shareholders Letter

Mr. Barry Rosenstein of Jana Partners reports


Jana Partners has mailed a letter to Agrium Inc. shareholders from its five highly qualified and independent nominees to the board. Each of the nominees brings a wealth of relevant experience and has made a personal investment and commitment to the long-term success of Agrium.

The text of the letter follows.

Jana Partners urges fellow shareholders to vote the blue proxy card or VIF for its experienced and independent board nominees

Further information available at the Jana website.

Dear fellow Agrium shareholders:

Sometimes you have to ignore the rhetoric and look at the facts. The questions we have raised about Agrium have set off a wave of baseless attacks that seem designed to obscure a simple truth: There is a massive value creation opportunity at Agrium which can be unlocked by adding relevant experience and an enhanced shareholder mindset to its board of directors. That is why we have made substantial personal investments in Agrium and why its largest shareholder, Jana Partners, has invested more than $1-billion in the company's future.

That is also why we are seeking your support for election to Agrium's board of directors. Jana's calls for change have already led to Agrium's first large capital return in years and better disclosure, but there is much more to be done. New voices are needed on the board to ensure that this is the beginning, not the end, of a renewed focus on shareholder value at Agrium.

"There's no doubt pressure from Jana prompted the fertilizer and agricultural products retailer to return $1 billion in additional cash to shareholders last year and to improve its disclosure, to the benefit of investors." (The Globe & Mail, Jan. 25, 2013)

We will bring to the board (1) the experience of executives who have created billions of dollars in value at companies cited by Agrium as peers for its retail business, (2) the knowledge of a former Canadian Minister of Agriculture, and (3) the voice of an investor with a long history of working with boards to unlock value. While we each bring different skills to the board and will make our own decisions, we will all work toward the same goal: Unlocking value for all Agrium shareholders.

"We see upside comfortably beyond $150 if the Jana slate wins, and initial downside to about $90 if the Agrium Board is re-elected." (Credit Agricole/CLSA, March 1, 2013)

While Agrium's stock has been lifted by a rising tide based on commodity prices, it has dramatically underperformed its potential.


Agrium shares underperformed an index of its peers by 62 per cent in the five years prior to Jana's involvement.

Poor retail performance

Despite spending more than $4-billion on retail acquisitions since 2007, Agrium has not realized the anticipated margin benefits of this growth, unlike its peers. Instead, Agrium's retail business has seen its return on capital cut by nearly half.

Lack of shareholder orientation

Until Jana's involvement, Agrium failed to pursue basic shareholder-friendly steps like returning capital and had reduced disclosure in retail despite its growth. By incentivizing retail management based on EBITDA (earnings before interest, taxes, depreciation and amortization) growth, not return on capital, Agrium also failed to align management incentives with shareholder value creation.

Other than Barry Rosenstein, Jana's founder, none of us has ever run for a contested board seat, but we believe the opportunity in addressing issues like these is worth it. We believe that retail is a "sleeping giant" that can generate an additional $30 per share just by addressing these issues and even more value over the long term with better board oversight.

"Jana's nominees to Agrium's board appear highly credible to us." (Bank of America, Jan. 29, 2013)

You have likely heard Agrium accusing us of riding in a "Trojan horse" while wearing "golden leashes," and you will likely hear more colourful attacks. Let us therefore clarify some things.

We have personally invested approximately $14-million in Agrium, and Jana has invested over $1-billion, and none of us did so in order to destroy the value of our investments. We encourage you to review our biographies at the Jana website. You'll see that we have spent years working collaboratively to create significant value.

We have called for a fair review of whether retail should be a separate, independent Canadian company. Many analysts believe that freeing retail, which has only been a large part of Agrium for seven of its 82 years, could generate an additional $20 per share. This question is one on which "reasonable people can disagree," as The Globe & Mail said last week, and even Agrium's chief executive officer has said "[I]t's a good question to ask" (The Globe & Mail, Jan. 31, 2013). A That is why we have asked for an independent review, not one that starts with a predetermined result which seems to have been the case with Agrium's review, and we would accept the results. And as a board minority, we could only bring about change through consensus.

We are 100 per cent aligned with all shareholders and stand to gain only to the extent that all shareholders gain. In addition to substantial personal investments, we also stand to gain through a non-discretionary, automatic formula tied 100 per cent to stock performance, like an option. It is true that Jana bears this expense, but that is true of every expense in this effort, which has already led to substantial value-creating change for shareholders. Despite Agrium's misleading claims, none of us will be bound by any duty other than our fiduciary duty as directors. All of us qualify as independent directors under Canadian securities laws and Agrium's own governance guidelines.

"Jana is nominating a retail 'dream team' to Agrium's board, which currently does not have one independent member with retail distribution experience." (Barron's, Nov. 26, 2012)

Now it's up to you. The annual meeting is April 9t We encourage you to look past the rhetoric and focus on Agrium's value potential. With your support, we can all help Agrium aim higher.


Barry Rosenstein

David Bullock

Mitchell Jacobson

Lyle Vanclief, PC, PAG (dist)

Stephen Clark

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