ALBERTA

Entire Agrium slate elected to board of directors; Jana nominees denied

04/09/2013 02:02 EDT | Updated 06/09/2013 05:12 EDT
CALGARY - Jana Partners LLC was defeated Tuesday in its battle to win seats on fertilizer giant Agrium Inc.'s board but the New York hedge fund suggested the fight may not be over.

All 12 of the company's nominees were elected to the board — some by a much wider margin than others — denying a spot to the five that had been nominated by activist investor Jana.

"We're very pleased that this proxy battle is behind us," Agrium CEO Mike Wilson told reporters after the meeting.

"It's been a long 10 months and now we can go and focus on what's very important to our shareholders, and that's growing the company, continuing to improve in the way we operate the company, looking at how we return capital to shareholders and embracing all kinds of new ways to expand shareholder value."

Jana managing partner Barry Rosenstein told shareholders the vote was "tainted" and said the fund intends to investigate whether Agrium lobbied investors to switch their vote after Friday's deadline and whether the company engaged in "vote buying" to sway the results.

He vowed Jana would "pursue all appropriate remedies."

Jana, which is Agrium's largest shareholder, said it had enough votes as of Friday to get two of its nominees — Rosenstein and former UAP executive David Bullock — on the board.

However, Rosenstein said Tuesday that enough votes were revoked over the weekend to sway the election.

He said Jana will continue to be a big shareholder in Agrium and that "we're not going away."

For its part, Agrium said the vote was done according to the rules.

"The loss was pure and simple, fair and square," said Walied Soliman, a lawyer working on behalf of Agrium, following the vote count.

"The results speak for themselves and stand up to any scrutiny. All of Agrium's shareholders had their say today and they supported Agrium. The victory of Agrium’s nominees was decisive, unequivocal and beyond reproach."

New York-based Jana, which has spent more than $1 billion for a 7.5 per cent stake in Agrium, has made a number of proposals for changes at the company — the most controversial of which has been to spin off Agrium's retail business into a separate company.

Agrium said the board has weighed the idea of a split and determined such a move would destroy shareholder value.

Jana has said it merely wants Agrium to thoroughly and independently review that option, as well as better manage capital, improve governance and cut costs.

Dorie Wood, a retiree who holds 400 Agrium shares, said she went into Tuesday's meeting supporting the company, but left convinced that Jana was right.

She described the Agrium team, in her opinion, as "arrogant and self-satisfied and smug."

Wood said she was particularly galled by news that Agrium paid brokers and financial advisers 25 cents for each share their clients vote in favour of the Agrium board, prompting allegations of "vote buying" by Jana.

At first, the idea of a New York hedge fund getting involved in Agrium made her a bit "queasy," but Wood said she's now sold on the value of shareholder activism.

"I think having somebody coming in and shaking things up is a really good idea. I'm really behind it now."

University of Calgary professor Bob Schulz said he wouldn't be surprised to see Jana shopping around its stake in Agrium to pension funds.

"I think they're looking for a buyout," said Schulz, with the university's Haskayne School of Business.

He also said challenging the results in court is one tactic Jana may try next.

"I don't this one's over," he said.

Wilson said he doesn't know what Jana's next moves are.

"If they stay, I will look forward to sitting down with them and saying 'okay, I want to talk with you like I talk to every shareholder.' I want to be very collaborative in this."

When asked how he intends to celebrate, Wilson said: "I'm not sure — either a glass of wine or a single malt."

"In all seriousness, the way I'm going to celebrate is to go back and talk to our entire team. It's unbelievable what they've done."

He added that morale has been good at the company throughout the whole affair.

"We seem to work better under fire."

Agrium shares closed down nearly three per cent to $96.53 on the Toronto Stock Exchange.

MORE:Albertacp