AGCO and TAFE agree on Massey-Ferguson deal

AGCO Corporation and Tractors and Farm Equipment Limited (TAFE) each announced in early July a set of agreements that resolve outstanding disputes and matters related to their commercial relationship including ownership and use of the Massey Ferguson brand in India and certain other countries, and other key governance issues between the parties.

In separate news releases, executives from both companies commented:

“We are pleased to have reached an amicable resolution with TAFE on all outstanding commercial, governance and shareholding matters,” said 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.”

“As we step into a new era in TAFE’s growth story, we recognize and cherish the long partnership we’ve had with AGCO, and continue to support AGCO as an engaged shareholder,” said Mallika Srinivasan, TAFE chairman & managing director. “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.”

Key commercial terms of the agreements include:

• All commercial agreements between AGCO and TAFE will be terminated, with agreed wind-down provisions.
• Ownership of Massey Ferguson brand will rest with TAFE as the sole and exclusive owner for India, Nepal and Bhutan including all rights, title and interest in “Massey Ferguson” and related trademarks and all goodwill associated therewith.
• All ongoing legal proceedings will be terminated.
• TAFE has agreed to participate in future share repurchase programs that AGCO executes but retains the right to maintain but not exceed its current ownership level of 16.3%.
• TAFE has agreed to customary provisions governing its shareholding in AGCO, including voting its shares in accordance with the recommendations of AGCO’s Board of Directors on all proposals at AGCO’s shareholder meetings, subject to certain agreed limited exceptions.
• Parties have agreed to mutual non-disparagement and TAFE not engaging in public activism.
• TAFE will repurchase AGCO’s current shareholding in TAFE for an aggregate amount of $260 million, subject to compliance with applicable law.
• All ongoing legal proceedings will be irrevocably and unconditionally withdrawn. A consent decree will be sought in the three suits relating to Massey Ferguson brand-currently pending before the Madras High Court in India.
• The agreements will become effective upon the completion by AGCO and TAFE of certain governmental and other processes in India relating to the repurchase of the shares held by AGCO in TAFE.