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Indian tractor major Tractors and Farm Equipment (TAFE) Monday filed a contempt petition against its long-term partner AGCO Corporation, the US-based agricultural equipment manufacturer, after the latter delivered immediate termination notices for its agreements with TAFE, including the brand licence for the popular Massey Ferguson tractors.
TAFE, India’s second-largest tractor manufacturer led by Mallika Srinivasan, is the largest shareholder in the $14.4-billion US company with a share of 16.3 per cent. TAFE had acquired the stake in 2012, and became its single largest shareholder and strategic long-term investor. AGCO’s other top shareholders include institutional investors including Vanguard and Blackrock. The top 10 shareholders have a cumulative stake of 52.8 per cent in AGCO.
In a statement, TAFE said the Commercial Court in Chennai had ruled in its favour with an interim status quo order with respect to the Massey Ferguson brand. Claiming it was impermissible for either party (TAFE or AGCO) to disturb the position as on April 29, 2024, it said, “TAFE has filed a petition against AGCO for disobedience of the orders of the court in a contempt petition in Chennai.”
The Indian company has asserted its claims over the ownership of the Massey Ferguson brand in a case filed before the Madras High Court.
“Since its inception in 1960, TAFE has produced, built and nurtured the Massey Ferguson brand…With a total annual production of over 180,000 tractors, over 100,000 Massey Ferguson are produced by TAFE in India with over 3 Million satisfied customers in its fold. TAFE and Massey Ferguson are synonymous in India…AGCO’s global brand website has historically for six decades made no mention of Massey Ferguson in the context of India, Nepal and Bhutan having ceded the entire territory to TAFE since the take-over of Massey Ferguson India in 1960,” TAFE said.
The TAFE statement came after AGCO delivered termination notices of its Massey Ferguson brand licence agreement with TAFE, distributor agreement with TAFE for the markets of India, Nepal and Bhutan, and intellectual property licence agreement with TAFE for the markets of India, Nepal, Sri Lanka, Bangladesh and Bhutan. In a press release, AGCO said Monday that it has “also commenced legal proceedings against TAFE in India related to the use of the Massey Ferguson brand following the termination of these notices.”
TAFE and AGCO had locked horns over Massey Ferguson, with the former claiming ownership of the popular tractor brand in India. TAFE has also accused AGCO’s management of pushing back against the Indian company’s growing influence at the latter, sought changes in AGCO’s board and a split of the position of chairman and chief executive officer, which is currently held by Eric Hansotia.
On Monday, TAFE also wrote a public letter to AGCO’s shareholders, in which it accused the AGCO management of “ignoring” its suggestions for improving the corporation’s business performance.
“As the Company (AGCO) has struggled in recent years to integrate acquisitions and expand into new markets, we have drawn on our experience to provide leadership with pragmatic suggestions. Unfortunately, AGCO has responded by ignoring these ideas, taking measures to disenfranchise TAFE, and isolating our representative on the Board…,” TAFE said in its letter to AGCO shareholders.
TAFE alleged that AGCO’s current state was such that despite being a long-term, strategic investor with no history of public activism, the Indian company felt “compelled” to air its concerns publicly. Calling for “shareholder-driven boardroom change” at AGCO, TAFE told the shareholders: “AGCO’s issues have also led us to begin assessing the ways in which a strategic transformation can be implemented, with new and independent directors who possess the expertise required to lead a lasting turnaround…”
