TAFE and AGCO reach comprehensive settlement

Chennai: Tractor and farm equipment maker TAFE and agri-machinery MNC AGCO have reached a "comprehensive settlement and resolution" after months of disagreement which had led to legal proceedings. The agreement resolves all outstanding disputes between TAFE and AGCO as well as TAFE's shareholding in AGCO, ownership and use of the Massey Ferguson brand in India and some other countries and other key issues.

The settlement will mean TAFE will buy back AGCO's 20.7% stake in TAFE for $260 million. This will make TAFE a wholly owned subsidiary of the Amalgamations Group. That will also mean, "TAFE will no longer be entitled to nominate a representative to the AGCO board of directors and AGCO's director on TAFE's board will step down," said an AGCO statement.

The agreement will make TAFE the sole and exclusive owner of Massey Ferguson brand for India, Nepal and Bhutan. This will include "all rights, title and interest in ‘Massey Ferguson' and related trademarks and all goodwill associated therewith" said a TAFE statement.

TAFE will retain its shareholding in AGCO at an ownership level of 16.3%, and not exceed it, while participating in AGCO's future buyback programmes. TAFE will remain a long-term investor in AGCO through planned periodic interactions with AGCO leadership, said a TAFE statement. TAFE will also support AGCO by voting of its shares in favour of all the recommendations of AGCO's board of directors at shareholder meetings, subject to certain exemptions.

Post this, all commercial agreements between TAFE and AGCO will be mutually terminated. However, TAFE will honour outstanding supply orders and continue to supply parts for all markets on agreed terms, said the TAFE statement. It will also mean that all ongoing legal proceedings will be unconditionally withdrawn.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," said the Tafe statement.

The agreements will become effective following 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.

Said Mallika Srinivasan, CMD of TAFE, "We recognize and cherish the long partnership we've had with AGCO and continue to support AGCO as an engaged shareholder. 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." Added Eric Hansotia, AGCO's chairman, president and CEO: "We are pleased to have reached an amicable resolution with TAFE on all outstanding commercial, governance and shareholding matters. We appreciate the TAFE relationship for its years as a commercial partner and continued support as a shareholder."