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Agrium fends off call to split up; shareholders will have final say, Jana tells board

Featured, News

Agrium Inc. last week responded to requests by Jana Partners LLC, a major shareholder, to split up the company – specifically, to spin off its Retail business.

"We are confident that Agrium shareholders will receive far greater value with less risk under the company’s current strategy," said Michael Wilson, Agrium’s president and CEO, in an Aug. 14 statement. "Agrium’s 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. Spinning off Retail would expose Agrium shareholders to substantial risk with no sustainable benefit, and we will not be pursuing it.

"Agrium is a top-performing company that has created significant shareholder value across the business cycle and that is returning excess capital to shareholders through dividend increases and share buybacks. We are in close contact with our shareholders and take their views seriously. We are confident the vast majority understand and support our strategy," added Wilson.

Agrium noted that it has increased its dividend nine-fold since December 2011, and recently announced a C$900 million share repurchase program in connection with the sale of Viterra’s Medicine Hat nitrogen facility. The company achieved record sales, gross profit, EBITDA, and net earnings in 2011 and again in the first half of 2012. In addition, Agrium says it is one of the best performing stocks in North America. The company’s share price has increased 43 percent year-to-date versus 12 percent for the S&P 500, and by 97 percent over the past three years. Agrium has also outperformed the S&P 500 and the company’s fertilizer peer group over the year-to-date and three-year periods.

Jana bought some 6.5 million shares of Agrium valued at $575 million as of June 30, 2012. This represents about 4 percent of the company, making it Agrium’s largest shareholder. It also held call options on 280,500 additional shares valued at $24.8 million. As of the June 30 Securities and Exchange Commission filing, Agrium was by far Jana’s largest investment, accounting for about 24 percent of its $2.4 billion portfolio. Jana has a reputation as an activist investor and was instrumental in getting publisher McGraw-Hill Cos. to split up, which is to happen later this year.

Jana quickly responded to Agrium’s Aug. 14 press release, saying that while Agrium has pointed to its short-term 2012 share price performance, long-term value creation is much more relevant. Jana said from May 2008 through last week, Agrium shares have returned 13 percent on the Toronto Stock Exchange, versus 57 percent for pure play fertilizer company CF Industries Holding Inc. and a 163 percent average return for the pure play retail comps selected by the company itself, belying the company’s arguments about the supposed benefits of its conglomerate structure.

Jana also said there is a lack of retail distribution experience on the Agrium board, resulting in suboptimal capital allocation and underperformance in Retail with respect to managing costs and working capital.

On Aug. 15, Agrium CEO Mike Wilson met with Jana Managing Director Barry Rosenstein. Agrium downplayed the timing of the meeting, saying it is traditional to meet with shareholders and that the meeting was arranged weeks in advance. At the meeting, Agrium said it made clear to Jana that the board carefully considered Jana’s position, but reiterated the board determination that a spin-off would not be in the best interests of the company or its shareholders.

Jana’s Rosenstein was not won over by the meeting with Wilson, as he quickly drafted a letter to the Agrium board and released it to the press. “We have watched in disbelief over the last few days as the management of Agrium Inc. has taken a scorched earth approach

Israel Chemicals Ltd. (ICL) – Management Brief

Management Briefs

Israel Chemicals Ltd. (ICL), Tel Aviv, has named Stefan Borgas, 48, to be its new president and CEO, effective Sept. 20. He has served as CEO of Lonza Group Ltd., a Swiss chemicals company which has production and sales facilities located throughout the world, and which operates in global markets, primarily in the area of raw materials for the pharmaceutical industry and the production of specialty chemicals, many in similar markets as ICL. He also serves as a director of Syngenta, the world’s largest seed and agrochemicals producer. Prior to his role at Lonza, he served for 14 years in a number of senior positions at BASF, one of the world’s largest chemical manufacturers, primarily in the U.S. while also serving in Germany, Ireland and China. He is currently in the process of relocating to Israel.

Borgas succeeds Akiva Mozes, who has held the positions for the past 13 years. He will retire following 37 years of service to ICL, though he will take on a new post as chairman of Oil Refineries Ltd.

The Mosaic Co. – Management Brief

Management Briefs

The Mosaic Co. has announced that Joc O’Rourke has been promoted to executive vice president – operations and chief operating officer. He will continue to be responsible for Mosaic’s mining and manufacturing operations, as well as EHS, supply chain, and procurement.

"This promotion is an important recognition of the many contributions that Joc has made since his arrival at Mosaic in 2009," said Jim Prokopanko, president and CEO. "We look forward to Joc’s leadership in the coming years as we help the world grow the food it needs."

Howard Fertilizer and Chemical Co. Inc. – Management Brief

Management Briefs

Howard Fertilizer and Chemical Co. Inc., Orlando, has added two sales veterans, with plans to grow its market share in the Southeast, including areas of South Carolina and Georgia. Ned Mullis, with 13 years of green industry experience, will service the golf market in the Charleston and Hilton Head areas of South Carolina. Mac Fite, an 18-year veteran, will service the golf market in the areas of Atlanta, east Georgia, and western South Carolina.

Brandt – Management Brief

Management Briefs

Brandt, Springfield, Ill., a manufacturer of agricultural specialty products, announced that Rodger Younker has joined the company as national sales director. He will lead specialty formulations sales initiatives, reporting to Bill Engel, senior vice president.

Younker has over 30 years of experience in specialty sales. Most recently, he was president and CEO of Prokoz Inc., a cooperative buying group servicing the pest control and turf and ornamental market. Prior to that, he held sales and management positions with Scotts, Bayer, Valent, and United Agri Products.

Current national sales director Dr. Julian Smith will take on a new role as director of the discovery and innovation team, leading the company’s plant health research and new product development.

CVR Energy Inc. – Management Brief

Management Briefs

CVR Energy Inc. has named Susan Ball chief financial officer and treasurer, effective Aug. 7. She replaces Frank Pici, who is leaving to pursue other opportunities. Ball has
more than 25 years of experience in the accounting industry and has been with the company for more than six years. For the past five years, she served as vice president, chief accounting officer, and assistant treasurer for CVR Energy and CVR GP, the general partner of CVR Partners. Prior to the formation of CVR Energy in 2007, Ball served in the same capacity for Coffeyville Resources LLC, which is now a CVR Energy subsidiary. Prior to joining CVR, Ball served as a tax managing director with KPMG LLP. She holds a bachelor’s degree in business administration from Missouri Western State College and is a certified public accountant.

Beneficial Reuse Management – Management Brief

Management Briefs

The Gypsoil™ division of Beneficial Reuse Management, Chicago, announced the recent hiring of Dr. Patrick McGinnity as national sales manager and Rich Kann as territory sales representative for Iowa. McGinnity will coordinate all sales of Gypsoil brand gypsum direct to agricultural crop growers and via distributors and agricultural retailers. He
will also oversee the development of the company’s rapidly expanding sales team and distribution network, now covering 15 states in the Midwest, Southeast, and Mid-South. Dr. McGinnity was previously director of business development for Calcium Products Inc., Gilmore City, Iowa, a marketer of mined agricultural products, including gypsum. He has over 30 years experience in the sales and marketing of agricultural products at companies such as Rohm & Haas, PPG Industries, NuFarm America, and Syngenta. He holds a PhD in Soil Microbiology from the University of Minnesota. Most recently, Kann was director of planning for Validus Services, Urbandale, Iowa. He earned a bachelor’s degree in agricultural systems technology, with a minor in agronomy, from Iowa State University.

CVR reports progress on UAN expansion, storage

Midwest, News, News Briefs, UAN

Sugar Land, Texas — CVR Partners LP expects its Coffeyville, Kan., UAN expansion to be complete by the start of 2013, earlier than expected. The expansion will allow CVR to convert virtually all of Coffeyville’s ammonia production into more highly valued UAN. This will increase CVR UAN capacity to over 1 million st, which is approximately 50 percent higher than current levels. CVR estimates the expansion could add about $0.25 per unit to cash available for distribution in 2013. CVR said all of the major towers have been erected, including the cooling tower. The motor control and main compressors have been set, and the building is in the final stage of completion. CVR says its new $2 million, 10,000 st storage distribution tank facility at Phillipsburg, Okla. (GM Nov. 14, 2011, p. 1), is essentially complete and is expected to go into service soon. CVR has been unloading railcars into the tanks and expects to start shipping product out of the tanks later in the month. CVR says the new storage will allow it to selectively store some production during periods of lower pricing and then sell and market that product during peak periods later in the year, thereby allowing the company to capture increased margins per UAN tons sold. CVR’s plan over the next several years is to build a number of these facilities near farming communities across the Midwest. CVR has previously noted that it might also build storage and market product out of Wynnewood, Okla., where CVR Energy Inc., its majority owner, bought the Gary-Williams Energy Corp. refinery last year (GM Nov. 14, 2011, p. 1).

County still hopes to find Helena a plant site

Midwest, News, News Briefs

Norfolk, Neb. — Helena Chemical Co. may not be giving up entirely on building a new fertilizer plant – which could cost as much as $5 million – in Madison County. Helena
officials have decided against locating southwest of Norfolk because of opposition from nearby property owners who do not want an industry operating close to their properties. Madison County currently has setbacks required for such development, but plans to hire a consultant to look over the entire situation. According to Planning and Zoning Administrator John Johnson, “What Helena told me is they wanted to locate in Madison County, but at this time decided they were no longer interested in the location and they wanted to be good neighbors, but are continuing to look at other sites in Madison County.” Johnson conceded that despite being in a rural area, the site really was unsuitable because there are a couple of subdivisions close by that generated the opposition. Three hearings were conducted regarding changing the setbacks – two by the commission and one by the county board. All three hearings had 90 or more residents attending, with most of them opposed.