Dive Brief:
- Farm equipment makers Agco Corp. and India-based Tractors and Farm Equipment Ltd. have settled their simmering legal and commercial disputes related to the usage rights of global brand Massey Ferguson over the past nine months.
- For more than 60 years, TAFE has been a licensee of Massey Ferguson and sells the branded equipment across three South Asia countries. Moving forward, the company will now take ownership of the tractor brand exclusively for business in India, Nepal and Bhutan, according to a news release.
- As part of the resolution, Agco and TAFE said they will terminate all commercial agreements and withdraw all ongoing legal proceedings between them. They have also agreed for TAFE to buy back Agco’s remaining equity in TAFE — valued at $260 million — prior to Nov. 28.
Dive Insight:
Established in 1960, TAFE is one of the largest tractor manufacturers in the world, selling over 180,000 units per year with a global reach that spans more than 80 countries, according to its news release. It is also Agco’s largest shareholder, holding a 16.3% stake in the Duluth, Georgia-based company, which has sparked friction when disagreements arise.
In April 2024, Agco terminated some commercial agreements with TAFE, citing “poor operational performance as a supplier, brand licensee and distributor.” In response, TAFE sued Agco and pushed for board changes, expressing concerns with the company’s decision-making and direction as tractor makers navigated a down market.
The back-and-forth eventually led to Agco terminating its license and distributor agreements with TAFE for the Massey Ferguson brand in key South Asia markets, sparking more legal issues and friction between the companies.
They have since come to a resolution that allows TAFE to have ownership of Massey Ferguson across the three countries, rather than regularly renewing licensing contracts, while retaining its majority stake in Agco.
Agco acquired Massey Ferguson in 1994 and maintains global ownership of the brand in all other countries.
The companies have also agreed to “mutual non-disparagement” and for TAFE to refrain from engaging in public activism moving forward. Additionally, TAFE can no longer nominate a representative to serve on Agco’s board of directors, and Agco’s director on TAFE’s board will step down.
“We are pleased to have reached an amicable resolution with TAFE on all outstanding commercial, governance and shareholding matters,” Eric Hansotia, Agco’s chairman, president and CEO, said in a statement July 1.
In addition to the company’s dispute resolution, Agco’s board of directors authorized to launch a new share repurchase program of up to $1 billion in company stock.
