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The company addressed in the article below, Agrium, Inc., reported plans on its investor relations website for a 4.5 hour presentation to sell-side analysts in New York City on the morning of the interview's publication. The company's presentation can be downloaded here, and the archived webcast can be be accessed from the same link provided in the original instructions:

Sell-Side Analyst Event

Date & Time: 1/28/2013 at 8:30 AM ET
Duration: 4.5 hours
Location: New York

Presenter: Mike Wilson — President & CEO

Webcast Information Listen to Webcast

Webcast URL: Click here to listen.
Dial-In Number: Primary Dial In: 866-770-7146, Secondary Dial In: 617-213-8068, Participant Code: 22480647


Unauthorized recording or downloading of this event is not permitted.

The proposals to which Agrium's management is responding are presented in a January 23, 2013 JANA Partners press release and referenced slide presentation.

For Forum plans to address investor decisions relating to activist proposals for short term value realization, citing the Jana-Agrium example as a candidate, see the December 21, 2012 Forum Report: Candidates for an Activist “Golden Goose” Analysis.


Source: Wall Street Journal, January 28, 2013 article


BUSINESS   |   Updated January 27, 2013, 9:21 p.m. ET

Agrium Declares, 'We're Not Broken'

Canadian Agriculture Company Strikes Back as U.S. Investor Jana Partners Pushes for an Overhaul

Jana Partners LLC disclosed last summer that it had acquired a big stake in Agrium Inc., a Calgary, Alberta, agriculture company, the second recent high-profile attack in Canada by an American hedge fund. Activist investor Bill Ackman had just won his proxy battle over control of another Calgary-based company, Canadian Pacific Railway Ltd.

But unlike Canadian Pacific Railway, Agrium's shares had done well, making less of a case that big changes were needed at the company, which has an array of businesses, including mining potash for fertilizer and selling seeds to farmers.


'If you split retail from the rest of [Agrium], it would destroy shareholder value,' says CEO Michael Wilson, seen last May at the annual meeting.


Since Jana made its announcement, Chief Executive Michael Wilson has come out swinging, saying outside proposals for boosting value—including spinning off the company's retail businesses—won't work.

He is slated to make that case to Wall Street on Monday. Agrium last week bumped up its forecast for fourth-quarter earnings, citing strong performance in its retail business, mostly in North America and Australia.

Jana says Agrium can unlock value by considering splitting off that business. The hedge fund also is pushing to replace five board members in a proxy vote, likely this year, and is calling for stock buybacks and dividend increases.

In an interview last week, Mr. Wilson, 61 years old, called the matter a "huge distraction" that threatens to erode shareholder value, not boost it.

Edited excerpts:

WSJ: Did you and Agrium's board learn anything from CP's experience with Bill Ackman that is helpful dealing with Jana?

Mr. Wilson: We look at a number of activists' activities to see what their motives…tactics [and] strategies are, and we've obviously done that. In some cases, [activism] adds value and it's useful. In other cases, it could lead to destruction of shareholder value. If you split retail from the rest of [Agrium], it would destroy shareholder value. If you blindly took your working capital down so you could buy back shares to the point where it affected your [margins for earnings before interest, taxes, depreciation and amortization to revenue], it would destroy shareholder value. If you stopped all your growth activities, it would destroy long-term shareholder value, absolutely.

WSJ: Has Jana's activism benefited Agrium and its shareholders in any way?

Mr. Wilson: It's unfortunate we have Jana in our stock. They have a mandate to split our company. They went out with that mandate, and they got very little traction with our shareholders [and] with the sell side. So, their approach changed to one of challenging the credibility of management [and] our board.…We've generated greater shareholder return than our peers. Our board is recognized for its governance and oversight. Our company certainly isn't broken.

WSJ: Jana wants to replace five Agrium directors with its own representatives, citing a lack of retail experience. Does the current board have any shortcomings related to retail?

Mr. Wilson: No. A board member isn't supposed to micromanage the company. What our board does is challenges us: "Are you understanding your costs?" "Are you embracing continuous improvement?" "Are you looking at working capital?" We've hired outside consultants to do a cold-eyes review of general and administration costs twice in the last five years. A company that is closed-minded doesn't do that.

WSJ: Will retail experience be a prerequisite for your own choices to fill upcoming vacancies?

Mr. Wilson: It's not a prerequisite. The ideal candidate is someone who has been involved in a growth company, has some international experience, some financial background, either some commodity or retail background, and has some supply-chain background. You will never fill all those boxes and so you sit back, and take the most you can get.

WSJ: Would Agrium consider any of the directors proposed by Jana as successors to retiring directors?

Mr. Wilson: That is a potential.

WSJ: Jana wants you to spin off retail operations. Does that fit with your strategy?

Mr. Wilson: The integrated model has huge value for us. From a wholesale point of view, it gives you greater operating effectiveness and efficiency. As an example, we run our potash and phosphate business at a higher capacity utilization than our competitors because when potash supply is in a surplus position, we have the ability to push a large amount through our retail [operations to be priced at market levels]. You've got supply-chain efficiencies as well as the opportunity for growth.

WSJ: Jana says it can generate US$50 per share of extra value for Agrium. Is that possible?

Mr. Wilson: When we met with Jana the first time, the majority of the US$50 came from splitting our company, and the rest came from share buybacks and [running] retail as well as we should. Since they've gotten very little traction on splitting the company, they've now morphed it to "management isn't capable of running the company and the board isn't doing its job."

WSJ: What's your view on Agrium's need to return cash to shareholders?

Mr. Wilson: The priorities for our use of cash are: No. 1, preserve shareholder value…by sustaining your assets, your dividend and by keeping, in our case, an investment-grade balance sheet. The No. 2 [priority] is accretive growth. The third is to return excess cash to the shareholders in the form of increased dividends or share buybacks, and we've done both.

Write to Ben Dummett at

A version of this article appeared Jan. 28, 2013, on page B6 in some U.S. editions of The Wall Street Journal, with the headline: Agrium Declares, 'We're Not Broken'.

Copyright ©2012 Dow Jones & Company, Inc. All Rights Reserved


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