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Agrium wins bcIMC support in battle with Jana Partners

Agrium Inc. annual general meeting in Calgary, May 11, 2012. The five men that activist hedge fund Jana Partners LLC wants installed on Agrium Inc.’s board of directors are dismissing claims that their independence would be compromised by so-called ‘golden leash’ payments.

Todd Korol/Reuters

British Columbia Investment Management Corp. says it is siding with Agrium Inc. in a heated proxy fight with Jana Partners LLC, the activist hedge fund that wants the fertilizer giant to spin off its retail business, among other things.

"After several meetings with Agrium's management and directors, as well as representatives of Jana Partners and their prospective board nominees, bcIMC has independently concluded that Agrium's current board provides effective oversight," the fund said in a news release.

The Victoria-based fund, which holds about 1 per cent of Agrium's stock, manages about $98.7-billion in assets globally on behalf of public-sector pension plans, public trusts and insurance funds.

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Its release comes just weeks before Agrium's April 9 annual general meeting in Calgary, where the contest is likely to be resolved by shareholder vote.

The fund says it believes the election of five Jana nominees to Agrium's board is not proportionate to the hedge fund's 7.5-per-cent ownership position in Agrium.

Doug Pearce, chief executive officer and chief investment officer at bcIMC, said Jana's plan is "not in the best interests of long-term shareholders, such as ourselves."

He adds that bcIMC is "comfortable" with the current board in light of two new additions with agricultural experience: former Viterra CEO Mayo Schmidt and ex-Deere & Co. executive David Everitt.

The Jana proposal that has garnered the most attention has been to split off Agrium's retail segment, through which seeds and other products are sold to farmers, from its wholesale business. Jana also wants Agrium to cut costs, improve corporate governance and manage capital more effectively.

BcIMC said it likes Agrium in one piece.

"Our analysis shows that there is significant value in Agrium's integrated business model, which bodes well for the company's long-term prospects," the fund said.

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"Agrium has performed very well in relation to its peers and the overall market, and the company has a strong commitment to employee safety and the environment, making it a solid long-term investment."

Jana partner Charles Penner said the hedge fund is "still very confident we have the overall support we need to bring value-unlocking change for all shareholders."

The dissident slate includes Jana managing partner Barry Rosenstein and former Liberal agriculture minister Lyle Vanclief, as well as David Bullock, Stephen Clark and Mitchell Jacobson, who had leadership roles at UAP, Brenntag and MSC, respectively.

Jana says Agrium's board needs more distribution experience.

Agrium has taken aim at what it calls the dissident nominees' "golden leash" arrangement with Jana, whereby the hedge fund would provide special incentive payments to serve on Agrium's board.

Agrium said that raises questions about their independence and commitment to Agrium's long-term performance.

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In a letter Friday to fellow investors, the dissident nominees dismissed those claims, saying they're "100 per cent aligned with all shareholders and stand to gain only to the extent that all shareholders gain."

The Jana nominees say those payments are tied entirely to stock performance, like options.

"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," they said.

"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."

The candidates also say they have collectively invested $14-million of their own money in Agrium.

Agrium has likened Jana's slate to a "Trojan Horse" misleading shareholders into breaking up the company.

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