Agrium makes terms of scuttled settlement deal with Jana Partners public

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The Agrium head office seen before the start of the company's annual meeting in Calgary, in a May 11, 2012 photo. THE CANADIAN PRESS/Jeff McIntosh

CALGARY - Agrium has made public the terms of a settlement deal with Jana Partners LLC that it says could have ended a bitter proxy fight two weeks ago, but ultimately remained unsigned.

The New York hedge fund quickly fired back, saying Jana's intentions have been mischaracterized as it agreed to neither the settlement nor the language in a joint news release publicized by the Calgary-based fertilizer giant (TSX:AGU) on Monday.

"It's one of the most unscrupulous things I've ever seen a company do and I've seen companies do a lot of unscrupulous things," said Jana partner Charles Penner.

Jana, Agrium's biggest shareholder with a 7.5 per cent stake, has put forward a slate of five directors to add to Agrium's board, including managing partner Barry Rosenstein, former Liberal agriculture minister Lyle Vanclief and three others with the distribution expertise Jana says is lacking.

The Jana proposal that has garnered the most attention has been to explore splitting off Agrium's retail segment from its wholesale business. Jana also wants Agrium to rein in costs, manage capital more effectively and improve governance.

Agrium has called Jana's ideas "flawed" and has said they would destroy shareholder value.

Agrium said Monday it wants to "set the record straight" on why talks broke down.

Agrium said its CEO, Mike Wilson, met with Jana managing partner Barry Rosenstein on Feb. 7 as part of an "extensive" investor roadshow to discuss the company's business, Agrium said.

The next day, Agrium told Jana it would appoint two new board members with retail distribution experience.

At the time, it had not said who those candidates were.

Agrium also proposed to appoint a mutually agreed upon director candidate, who had been approached by Jana but declined to join its dissident slate. Jana says that person was one of many it spoke to, but never formally asked to join its slate.

That unidentified candidate agreed to join the board, but only if the proxy contest ended.

Agrium said Rosenstein agreed on the morning of Feb. 10 to appoint either the mutually agreed upon candidate or one of its own to the board, along with the two directors Agrium picked.

But Jana said it would only be amenable to such a settlement if it approved of the two Agrium nominees and that "Agrium agreed in some form to fully exploring the issues raised by Jana."

Jana said neither of those things occurred.

The draft joint news release published by Agrium said the two had agreed to appoint the Jana candidate to the board along with Agrium's two candidates.

The names of both the mutually agreed upon candidate and the Jana candidate have been removed from the documents.

Agrium said Jana also agreed to stop its activist shareholder initiatives until after the close of Agrium's 2014 annual general meeting.

Jana said it wasn't until the evening of Feb. 10 that Agrium gave Jana the names of its two director nominees: former Viterra CEO Mayo Schmidt and former John Deere & Co. executive David Everitt.

Jana has since said neither Schmidt nor Everitt have the adequate distribution experience that Agrium needs and were "pre-screened to ensure compliance with the status-quo."

Lawyers for both camps tried to work out a settlement until the afternoon of Feb. 11.

A call between Wilson and Rosenstein was set up for 3 p.m. that day.

Agrium said that's when Rosenstein demanded to add two Jana nominees to the board, which Wilson refused. Discussions were then terminated.

"The press release disclosed today by Agrium was drafted by Agrium itself and was never approved by Jana, and includes self-praise Agrium tried to put in our mouths," Jana said in a release Monday.

Making that document public "in order to evidence its false version of events speaks volumes about the current board's integrity and the need for change," it added.

It's looking likely that the battle will be resolved by a vote at Agrium's annual general meeting on April 9, scheduled about a month earlier than usual.