Not to be taken lightly
This isn’t JANA’s first rodeo. The company has had great success with similar situations in recent years.
In late 2010, JANA began discussions with Marathon Oil Corporation (NYSE:MRO) to make certain changes at the company. JANA’s proposal was to split the integrated company in two, between its upstream and downstream operations; to return more cash to shareholders; and to restructure some of its operations to cut costs. Sound familiar?
Marathon ended up taking JANA’s advice, splitting into Marathon Oil and Marathon Petroleum Corp (NYSE:MPC), with both companies pledging to return cash to shareholders via $2 billion share repurchases. An investor who bought shares after JANA’s involvement would have nearly doubled his money by now.
This is almost completely due to Marathon Petroleum’s incredible performance. ConocoPhillips (NYSE:COP), another integrated player at the time, spun off its own downstream operations into Phillips 66 (NYSE:PSX) almost immediately after Marathon, and the two sets of companies have had nearly identical returns since. Phillips 66 has even set up a $2 billion share-repurchase plan, similar to the Marathons, and will soon form a tax-advantaged master limited partnership around some of its transportation assets, an idea JANA proposed to Marathon to cut costs.
JANA also proposed a breakup plan to The McGraw-Hill Companies, Inc. (NYSE:MHP). This company had already been considering some type of breakup when JANA came along, so JANA can’t really take all the credit here, but the company’s stock had performed remarkably well after JANA announced its proposal in August 2011. At least it did until recently, when the federal government announced that it was suing Standard & Poor’s, a division of McGraw-Hill, in a $5 billion fraud case.
The Foolish bottom line
In a bizarre move, Agrium recently moved its annual shareholder meeting up a full month. The move was announced a week ago Friday, after the market close, on a holiday weekend — typically something a company would do to bury news that it don’t want noticed. Moving the meeting gives JANA less time to make its case and shareholders less time to consider it. But I don’t think JANA needs that extra month. Its case is strong and is backed up by an excellent track record. How the vote goes at that meeting will have a huge impact on Agrium’s business, and its stock.
The article A Brief History of JANA Partners originally appeared on Fool.com and is written by Jacob Roche.
Fool contributor Jacob Roche and The Motley Fool have no position in any of the stocks mentioned.
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