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Agrium Inc
Symbol C : AGU
Shares Issued 149,359,215
Close 2013-03-25 C$ 101.26
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Agrium dissident Jana says it doesn't invest to lose

2013-03-25 17:57 ET - Shareholders Letter

Mr. Barry Rosenstein reports


Jana Partners has mailed a new letter to Agrium Inc. shareholders.

The text of the letter follows.

Jana partners urges fellow shareholders to vote the blue proxy card or voting instruction form for its experienced and independent board nominees.

Dear fellow Agrium shareholders:

Agrium is hoping that scare tactics and illogical arguments will get you to vote against the highly qualified and independent nominees Jana Partners has proposed for a minority of its board of directors. We are hoping the facts and the potential to unlock substantial unrealized value for all Agrium shareholders -- that means you and us -- will carry the day. So here are the facts.

Agrium has consistently underperformed its potential in shareholder returns, including trailing a weighted index of its peers by 62 per cent and 22 per cent in the last five and three years, respectively. While Agrium cites a 467-per-cent return over more than seven years, this index has returned 817 per cent over the same period. Agrium can do better for shareholders, and it does not require radical change to do so, just an open mind. That is why we have invested over $1-billion in Agrium and why we are asking for your support.

We approached Agrium last May, expressing our concerns and suggesting steps that could be taken to address those concerns. Agrium took some positive steps in response, notably increasing its dividend and commencing its first large-share repurchase, but has resisted further changes that could create even greater long-term value.

Agrium has tried to paint us as a New York hedge fund out to destroy value at your company. Stereotypes are easy, but the truth is always better. Our business is to create value for our investors, including pension funds, institutions, and individuals in the United States and Canada. That's what we've done for years, usually by working constructively with boards and management.

"We see upside comfortably beyond $150 if the Jana slate wins, and initial downside to about $90 if the Agrium board is re-elected."

The company would like you to believe that our interests differ from yours, so that we could somehow destroy value without destroying the value of our own investment. That makes no sense. We own Agrium common stock just like you and stand to gain or lose just like you. We have proposed improvements for the long term, not the short term. We call them the five Cs:

  • Cost management: reviewing retail costs and corporate costs;
  • Controls: improving disclosure and better aligning incentives with value creation;
  • Capital allocation: a more consistent and shareholder-friendly capital return policy;
  • Conglomerate structure: a fair and unbiased structural review to address Agrium's persistent valuation discount;
  • Corporate governance: addressing Agrium's insular and entrenched responses to new ideas.

To help the board address these issues, Jana has proposed five new, independent directors, who would bring much needed experience and a very clear shareholder mindset to the board. David Bullock, Mitchell Jacobson and Stephen Clark have created literally billions of dollars of value at distribution companies which Agrium has cited as peers for its retail business. Lyle Vanclief served Canada as the Minister of Agriculture and ran a commercial farm before that, and I am the founder of Jana Partners and have been working to unlock value at companies for over two decades.

The company has accused us of only wanting to break up Agrium to destroy value, but again they are hoping you will believe we invest money to lose it. It is true that we have called for a review of whether retail, which has been built primarily through acquisitions and has only been a large part of Agrium for seven of its 82 years, would be better off as an independent publicly traded Canadian company. Despite Agrium's supposed shock at this idea, many investors have been asking this for years, and Agrium's chief executive officer has called this a good question to ask (The Globe and Mail, Jan. 31, 2013). If a fair and independent review, which Agrium has failed to conduct, showed that Agrium's current structure was the best one, we would accept that result.

Contrary to what you have heard from the company about Jana Partners' nominees, each of us will be independent, each of us will benefit only if all shareholders benefit and each of us will only have a duty to Agrium.

Now we need your support to help Agrium realize its full value potential for all shareholders.

Vote the blue proxy or VIF for unlocking Agrium's substantial value creation potential.


Barry Rosenstein

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