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(B)(N) AGU Agrium Incorporated

November 19, 2012

Drama. Who is Jana Partners LLC today? From their website, we know that Jana Partners is an SEC-registered investment manager and hedge fund founded in New York in 2001 with approximately $3.5 billion in investments and “commitments” (they say) at the present time. Well, who isn’t SEC-registered? But they also say that they have a successful history of investing in companies and working constructively with managements and boards to promote “value creating change” and that they are adept at making or taking their “case” publicly to the shareholders when necessary.

When necessary? By proxy and Powerpoint? Frankly, my dear, we don’t know what any of that means in the absence of enforceable guarantees but we do know what “promoting value creating change” means. Nada  – please see our recent Post, The Last Twinkie, November 2012, or Maximising Shareholder Value (LOL), August 2012, among many others dealing with companies, IPOs and hedge funds.

Jana’s current “case” appears to be AGU Agrium Incorporated in which they have invested the gigantic sum of almost $900 million in Agrium’s common stock since August 2012 (fairly recently and apparently worth $763 million in late September) to hold about 6% of the common shares outstanding and nearly 30% of their money which certainly suggests a lot of  focus for a hedge fund and an urgent need to “unlock value”, one would think (Reuters, November 19 2012, Jana launches proxy battle, pressures Agrium for change)

In contrast, we bought Agrium in early 2011 at $70 (please see Exhibit 1 below, Stock Price (SP) Red Line above the Risk Price (SF) Black Line) as a Perpetual Bond™ investment and are currently holding it at $100 and receiving a dividend of $1.00 per share per year of which it pays $160 million per year in total. We’re fine with that and hope that the company continues to do its great work for us, thank you very much. The current Risk Price (SF) is $90 and one really shouldn’t expect much more than that as a takeover price. Jana has suggested a “takeout” price but they hardly know each other.

Exhibit 1: (B)(N) AGU Agrium Incorporated – Risk Chart

Agrium Incorporated is a retail supplier of agricultural products and services in North and South America and producer and marketer of agricultural nutrients and industrial products. It produces nitrogen, phosphate and potash.

(Please Click on the Chart to make it larger if required.)

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