RiskMetrics thorn in Agrium bid

A prominent proxy advisory firm is poking holes in Calgary-based Agrium Inc.’s (TSX:AGU) US$3.8-billion strategy to take over U.S. fertilizer maker CF Industries Holdings Inc. (NYSE:CF).

CALGARY — A prominent proxy advisory firm is poking holes in Calgary-based Agrium Inc.’s (TSX:AGU) US$3.8-billion strategy to take over U.S. fertilizer maker CF Industries Holdings Inc. (NYSE:CF).

RiskMetrics Group’s ISS Governance Services recommends CF shareholders re-elect the company’s three board members at an annual general meeting set for April. 21, rather than withhold their votes, as Agrium has asked them to do.

In touting its offer, Agrium has said a combination with CF would create the world’s fourth-largest fertilizer producer with $14 billion in annual revenues and achieve $150 million in annual cost savings.

But despite the “compelling strategic rationale” for the bid, a report by RiskMetrics raised some concerns about Agrium’s tactics.

“Agrium has played a version of the old ‘four corners’ basketball offence, stalling for time rather than pressing the ball up the court and driving to the basket for the win,” the report said.

“Although Agrium has fairly reasonable explanations for each move it has made, looking at the steps on a collective basis, along with the timing of the bid itself, may cause CF shareholders to conclude that the Agrium bid is something less than ‘certain”’

Agrium missed a Feb. 12 advance notice deadline that would have allowed it launch a proxy fight rather than a “softer” withhold-vote campaign, RiskMetrics noted.

Agrium also waited a month to file for antitrust clearance for its takeover.

CF chief executive Stephen Wilson said his company was “pleased” by the RiskMetrics report.

Agrium “strongly” disagreed with the RiskMetrics recommendation.

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