U.S. hedge fund Jana Partners LLC has bought a large stake in Agrium Inc (AGU.TO) (AGU.N), in a move to pressure the Canadian fertilizer company to cut costs and spin off its farm retail distribution arm, a report said late on Monday.
New York-based Jana has added to a stake now worth nearly 5 percent of the $15 billion company since June, making it the biggest shareholder of Agrium, and the purchase will be disclosed in a regulatory filing later this week, the Wall Street Journal said in its online edition.
The activist investor has in just over a year picked up significant stakes in Marathon Petroleum Corp (MPC.N), McGraw Hill Companies Inc MHP.N and agitated for change at Dutch delivery firm TNT Express (TNTE.AS).
Based in Calgary, Alberta, Agrium is one of the world's top producers of nitrogen-based fertilizers like urea and ammonia, and is also the biggest retail seller of farm products like fertilizer, crop chemicals and seed in the United States.
Rather than spinning off the retail business, Agrium has been building it up.
It has a C$575 million ($579 million) deal with Glencore International PLC (GLEN.L) to buy 232 Canadian farm retail outlets and 17 Australian stores currently owned by Viterra Inc VT.TO, which would make Agrium the biggest farm retailer in Canada. The deal still needs regulatory approval.
Glencore is attempting to complete its takeover of Viterra this summer.
"We can't comment on what kind of stake any shareholder may or may not hold in Agrium," said Agrium spokesman Richard Downey in an email comment to Reuters. "What we can say is that Agrium's integrated strategy is producing record results and sustainable value for shareholders and that we do not plan to spin off our retail business."
A spokesperson for Jana could not immediately be reached for comment.
Agrium's shares have soared more than 40 percent this year, helped by the severe U.S. Midwest drought, which has scorched corn and soybean crops and driven up their prices sharply. Fertilizer prices often track the prices farmers can collect for their crops, and corn is an intensive fertilizer user.
Earlier this month, Agrium reported a 20 percent jump in second quarter profits to $860 million, or $5.44 per share. ($1 = 0.9932 Canadian dollars)
(Reporting by Rod Nickel in Winnipeg, Manitoba; Editing by Richard Pullin)