JANA Partners Unveils Full Agrium Analysis and Proposals to Unlock Value

NEW YORK, Oct. 1, 2012 /PRNewswire/ -- Barry Rosenstein of JANA Partners LLC today set forth publicly for the first time JANA's full case for value-unlocking structural and operational change at Agrium Inc. ("Agrium") (TSX /NYSE: AGU) in a presentation at the 8th Annual New York Value Investing Congress. As it typically does, JANA first presented its arguments privately to Agrium's management and board beginning in May of this year.  In response, Agrium's board and management revised Agrium's historical comparable company set, despite having argued for such comparables themselves for years, to argue against the company's true value potential, a decision which Mr. Rosenstein in his remarks called "outrageous, disingenuous and borderline unethical."  JANA has now therefore set forth its analysis publicly and today urged shareholders to review and decide for themselves whether they want to see Agrium's full value potential realized.  JANA today encouraged all shareholders and other interested parties to review this analysis, entitled "Unlocking Agrium's True Value Potential," at www.JanaAGUAnalysis.com.

In its analysis, JANA argues that Agrium remains fundamentally undervalued given the strength of its two main businesses, a "Retail" distribution business and a "Wholesale" fertilizer business.  In addition, JANA notes that Agrium's shares have underperformed the weighted average of the company's true pure play peers over multi-year periods.  While Agrium's shares have performed well on an absolute basis and in the short-term this year, JANA in its analysis argues this is not a justification for depriving shareholders of the company's full value creation potential.

JANA's analysis cites structural and operational issues as the sources of the company's underperformance, and notes that such issues likely stem from a lack of true retail distribution experience on the board.  From a structural perspective, JANA argues that by pairing Retail, which is a stable agricultural distribution business, with Wholesale, which is a volatile, commodity-linked fertilizer business, Agrium has obscured Retail's true value while generating no meaningful synergies from this combination.  In addition, JANA argues, pairing Retail with Wholesale prevents each from achieving their optimal capital structure and capital allocation. 

From an operational perspective, JANA argues that a failure to manage costs has caused Retail to substantially underearn and that Agrium has suffered from poor capital allocation, including a failure to manage working capital, inadequate returns on some of its largest acquisitions and – prior to a recent return of capital announcement which followed JANA's engagement – a poor historical track record of returning capital to shareholders.  In addition, JANA notes that Agrium has compounded these issues with insufficient public reporting disclosure in Retail.

To remedy these issues and unlock Agrium's buried value potential, JANA has proposed the following steps:  committing to a larger and more consistent return of capital going forward, improving Retail disclosure, initiating a working capital and operational cost reduction plan in Retail, rationalizing unallocated corporate overhead and pursuing a separation of Retail and Wholesale.

In his remarks today, Rosenstein urged Agrium's board and management to set aside "diversionary tactics" and embrace Agrium's value creation potential, saying "we see no reason why shareholders should be forced to settle for 'good enough' when the company can so readily address its persistent underperformance and undervaluation by addressing the issues we've raised."

For more info contact JANA Partners LLC at (212) 455 0900

SOURCE JANA Partners LLC

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