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A simmering dispute in India between AGCO Corp. and its largest shareholder has reached a resolution the Gwinnett-based company hopes will pave the way for future share buybacks and continued growth.
Tractors and Farm Equipment Ltd., or TAFE, run by India’s so-called “Tractor Queen” Mallika Srinivasan, raised issues about AGCO’s governance and treatment of TAFE in early 2024.
The Chennai-based company owns 16.3 percent of AGCO shares valued at $1.22 billion but pointed to increasing strategic divergence with its more than 30-year partner.
In a letter to AGCO shareholders in September, TAFE floated the idea of reconstituting the Fortune 500 company’s board of directors to address alleged mismanagement that manifested in AGCO’s declining stock price.
AGCO, meanwhile, asserted in April that TAFE had failed to live up to its end of the companies’ commercial arrangement within India and started legal proceedings and a move to appoint “hand-picked” board members rather than working toward an amicable resolution.
AGCO cited TAFE’s “continued poor operational performance as a supplier, brand licensee and distributor to AGCO, as well as TAFE’s continued lack of focus” on key customers.
The dispute centered around the companies’ work together to promote and sell tractors by Massey Ferguson, a globally recognized brand that TAFE has held rights to in India and two bordering countries since 1960. AGCO purchased the brand in 1994, folding it into a larger global portfolio built through consistent acquisitions.
The terms of this week’s truce enable TAFE to retain rights as the exclusive distributor of Massey Ferguson in India, Nepal and Bhutan. TAFE also agreed to buy out AGCO’s 20.7 percent stake in TAFE for $260 million, and the two sides are set to unwind all ongoing commercial collaborations.
Subject to Indian government approval, the deal would end all outstanding legal proceedings, with the companies agreeing to non-disparagement clauses.
Both companies will forfeit their representatives on the other’s board of directors, though TAFE will vote with the AGCO board in future matters and participate in share buybacks at its current ownership proportion, capping its stake at the current 16.3 percent.
TAFE is owned by Amalgamations Group of India.
“We appreciate the TAFE relationship for its years as a commercial partner and continued support as a shareholder,” said Eric Hansotia, AGCO’s Chairman, President and CEO. “AGCO’s Board and management team are fully focused on our Farmer-First strategy, which we believe will improve outcomes for farmers, drive operational success for our company and deliver strong returns for shareholders.”
Ms. Srinivasan, meanwhile, offered the following statement on the TAFE website:
“TAFE and Massey Ferguson have been synonymous in the minds of the Indian customers for over 65 years. We re-dedicate our commitment to transformation of Indian agriculture through our innovative products, solutions and service to the farming community in India. As we move towards our vision of ‘Cultivating the World’, we are confident of delivering exceptional value to all our stakeholders.”