JANA Partners Responds to Agrium (AGU) Filing; Says Management Talking in Circles

August 20, 2012 1:11 PM EDT
JANA Partners LLC today released the following statement in response to a filing made today by Agrium Inc. (NYSE: AGU)

"This is more of the same from Agrium's board and management: talking down their own stock price to avoid an honest debate about unlocking full shareholder value and twisting themselves into knots trying to reconcile their past comments with their current obstructionist position. The truth, however, is simple:
  • Agrium's stock price has dramatically underperformed its pure play fertilizer peer CF Industries and a composite of its true pure play retail comparable peers over a multi-year period, regardless of the short-term performance of the company's stock this year.

  • This is due to a combination of factors including Agrium's conglomerate structure, operating underperformance in Retail, high costs, and lack of true retail distribution experience on the board. While it is not surprising that management would quibble with some of the numbers in our analysis given their inside knowledge of the company, absolutely nothing they have said substantively refutes these larger points.

  • Not content to only mischaracterize their own prior comments about the value of Retail, Agrium's board and management now mischaracterizes our comments regarding Retail's trading value, which is as disingenuous as their initial attempt to disavow years of pointing to higher trading multiples, and equally reckless for shareholders. Just like Agrium's board and management before we began our discussions, we believe the Retail business is dramatically undervalued by the market based on comparisons to its most comparable peers. We could not have been clearer on this point in our public and private communications with Agrium and to suggest otherwise is completely false. While it is true that private equity interest would undoubtedly serve as a backstop or even provide a premium to a standalone Retail's market value, we continue to fully believe the market would ascribe significantly greater value to Retail independently than as part of Agrium.

  • It is also astounding that the board and management continue to claim to have done no real analysis of the true value of Retail for years until we pressed them to address the company's underperformance, despite spending billions on Retail acquisitions. Instead of engaging in a constructive discussion about how to further highlight the value of Retail, Agrium's Board instead elected to pursue a scorched earth campaign, creating a set of revisionist, middle of the night comparables to justify the current structure and avoid a real debate. While the board and management now seek to mislead shareholders regarding our views on this point, we have rejected these revisionist comparables from the start, including in our letter to the board immediately following our meeting last week. In addition, as we made clear in our meeting and the company could not refute, the company's comments about the decline in the S&P since UAP was last publicly traded are completely irrelevant, as both the company's original comparable company set and its revisionist group both trade at or higher than the same multiples as they did at that time.

There is little that is new, but much that is profoundly troubling, in the company's increasingly desperate comments. We look forward to continuing our discussion with shareholders based on the facts, with the goal of unlocking Agrium's true value creation potential for all shareholders."

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