NEW YORK, N.Y. - Jana Partners says it looks like it has received enough votes to get two of its five nominees elected to the board of fertilizer giant Agrium Inc. (TSX:AGU) at the company's annual meeting Tuesday.
The New York hedge fund, which has been in a bitter proxy fight with Agrium management for months, said in a statement Monday that it believes both managing partner Barry Rosenstein and another of its nominees, David Bullock, had received enough votes as of the deadline Friday.
"While only Agrium knows the vote results for both sides, based on the number of votes received by these nominees and the typical turnout for contested Canadian elections, and leaving aside the potential impact of Agrium's offer to pay financial advisers and brokers for favourable votes, it appears that both will be elected," Jana said.
However, Jana complained some shareholders who supported its nominees tell of having been contacted after the deadline and being asked to switch their votes.
Agrium's meeting rules permit it to extend the voting deadline without public notice if doing so would help the current board win re-election, Jana said.
Jana has previously criticized Agrium for paying brokers and financial advisers 25 cents for each vote their clients cast in favour of existing board directors, between a minimum of $100 and a maximum of $1,500 per shareholder.
Agrium quickly issued a brief statement of its own, saying it remained "very confident" it would prevail in the proxy contest and accused Jana of speculation and "spreading misinformation."
The company said Jana had itself been in contact with shareholders over the weekend and urged shareholders to contact Agrium or its proxy solicitors if they had any questions.
Jana, which has spent more than $1 billion for a 7.5 per cent stake in Agrium, has made a number of proposals for change at the company.
The one that has garnered the most attention has been to break off Agrium's retail business into a separate company.
Jana says it merely wants Agrium to thoroughly and independently review that option, as well as manage capital better, improve governance and cut costs. Agrium contends that a split remains Jana's primary aim, and has accused it of using "Trojan horse tactics" to break up the company.
Rosenstein said Monday that Agrium's opposition to adding a minority of new voices to the board had been "based on its claim that an overwhelming number of shareholders did not favour such change."
"Now that this has been disproven, it is time to accept that result rather than continuing to fight behind the scenes," he said.
"There is no good reason why the full board cannot work with a small number of new directors, particularly given the many areas of mutual agreement."
Rosenstein and Bullock — previously with UAP, the U.S. farm products retailer Agrium acquired in 2008 — were the two Jana director nominees backed by influential proxy advisory firm ISS.
Its recommendation did not, however, include Jana's three other candidates: former Liberal agriculture minister Lyle Vanclief, ex-Brenntag CEO Stephen Clark and ex-MSC Industrial CEO Mitchell Jacobson.
ISS said Jana made a "compelling" case for change.
"The gnawing question is not whether the company should spin off its distribution business, but whether a board still loudly repudiating the very changes it has begun to implement, changes which have encouraged many shareholders and analysts, is a board with a burgeoning credibility problem," ISS said.
"Shareholders may well wonder if, once the bright lights of this proxy contest are turned off, the progress will fade as well.''
Other proxy advisory firms — Glass, Lewis, Pensions Investment Research Consultants and Egan-Jones — have endorsed Agrium's existing board.
In a recent research note, Scotia Capital analyst Ben Isaacson warned that using Jana's proxy, even to vote for one or two of its nominees, would be a "mistake."
"In our view, this would inevitably lead to a split and toxic board, where competing visions and infighting destroy shareholder value rather than create it."
So far, four shareholders have said publicly they intend to side with Agrium: Alberta fund manager AIMCo, B.C. fund manager bcIMC, the Canada Pension Plan Investment Board and Letko, Brosseau and Associates. Together, those shareholders account for just a small fraction of Agrium's stock.
Agrium shares rose $1.37, or 1.4 per cent, to $99.11 in mid-day trading on the Toronto Stock Exchange on Monday.