Agrium Rejects Retail Spinoff Proposal Presented by Top Investor
By Amanda Brodhagen, Farms.com
Agrium Inc. Canada’s largest fertilizer provider isn’t giving in to the push from U.S. hedge fund Jana Partners to spin off its retail division. The New York based hedge fund is Agrium’s single largest shareholder, owning 6.5 million in company shares. Despite Jana’s influence, it wasn’t enough to sway senior management to pursue that endeavor.
Agrium was quick to push back releasing a company statement stating that the board has “carefully evaluated the idea of spinning off retail and has unanimously determined that it is contrary to the best interests of the company and its shareholders” said Michael Wilson, Agrium’s Chief Executive.
The company was not warm to the idea of Jana’s proposal, noting that it would not take the risk of spinning off its retail division. “Spinning off retail would expose Agrium shareholders to substantial risk with no sustainable benefit, and we will not be pursuing it,” said Wilson.
To date, the retail segment of the operation accounts for 63% of the company’s total revenue and since 2007 Agrium has invested more than $6 million acquiring assets. The company is also in the midst of acquiring 250 agricultural retail outlets in Canada and Australia. They are positioned to buy some assets from grain-handling giant Viterra Inc. which is being acquired by Glencore International.
The company’s shareholders remain content with the status quo as Agrium doubled their semi-annual payout to shareholders of 50 cents per share in June 2012, which is up 22.5 cents a share from the last payout.
Jana’s main argument is that Agrium is running its retail division like a wholesale operation. While Jana’s proposal to position the company in a different direction has been rejected, the hedge fund plan’s to continue to push their proposal into reality as part of their long-term goals.