Agco has settled its legal dispute with Tractors and Farm Equipment Limited (TAFE) over the Indian tractor company’s exclusive usage of the Massey Ferguson brand in India, Nepal and Bhutan. Under an agreement filed with the U.S. Securities and Exchange Commission, TAFE bought back Agco’s 20.7% stake for $260 million, while retaining its 16.3% stake in the U.S.-based ag machinery manufacturer.
“TAFE and Massey Ferguson have been synonymous in the minds of the Indian customers for over 65 years,” saya Mallika Srinivasan, TAFE’s chairman and managing director. “We re-dedicate our commitment to transformation of Indian agriculture through our innovative products, solutions and service to the farming community in India.”
TAFE, which dates to 1960, is the second-largest tractor manufacturer in India by volume, selling more than 180,000 tractors annually.
The dispute began about a year ago when Agco pulled out of a business agreement, triggering legal filings. TAFE challenged Agco’s action and received a favorable judgment by the Madras High Court.
With this new agreement, the two ag machinery companies will terminate all commercial agreements after a set wind-down period. TAFE has agreed to honor all supply orders and continue to supply parts for all markets on agreed terms.
Additionally, both brands will remove their respective representatives from each other’s boards, and TAFE will align its voting shares with the recommendations of Agco's board of directors on most proposals. In the future, TAFE cannot exceed its current ownership level.
"We are pleased to have reached an amicable resolution with TAFE on all outstanding commercial, governance and shareholding matters," says Eric Hansotia, Agco's chairman, president and CEO. "We appreciate the TAFE relationship for its years as a commercial partner and continued support as a shareholder. 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."