The ongoing rift between TAFE and AGCO has taken a new turn, as the Indian company takes further court action to protect its interests in India.
TAFE has asserted its claims over the ownership of the Massey Ferguson brand in a case filed before the Madras High Court.
This is in addition to the action taken at the Commercial Court in Chennai, which ruled in favour of TAFE with the placement of an interim status quo order with respect to the Massey Ferguson brand.
This temporary restriction disallows any change to the business relationship as it existed up until April 29, ensuring that neither party can disturb the arrangement while they addressed their differences.
Horses for courses
TAFE supports its claim to the MF badge in India by pointing out the tractors it manufactures and sells in the distinctive red livery are quite different to any product that AGCO makes across its whole range.
The company underlines this by noting that its products are India-centric in design and are ideally suited for small and medium farmers of India and across the world.
TAFE further adds that since 1960, AGCO, and presumably Massey Ferguson before the take over, made no mention of serving the states of Bhutan and Nepal, therefore it contends that AGCO and its predecessors ceded these sales territories to TAFE.
TAFE runs out of patience
In a separate move, TAFE has publicly issued a strongly worded letter to AGCO’s board of directors, noting that as a shareholder, holding 16.3% of the corporations stock, it is entitled to be heard and responded to.
It is a rather lengthy proclamation, setting out various grievances which highlights AGCO’s poor performance of late when compared to its peers, John Deere and CNH.
A 19% drop in share price being a particularly notable feature of the past year.
It lays the blame for this lacklustre showing clearly at the door of the board and requests that the role of chair and CEO be separated once more so as to “provide a stronger balance of authority and responsibility that is in both the company’s and investors’ best interests”.
Positive suggestions
However, it is not all demands and scolding, TAFE takes time to set out an alternative vision for the corporation which, it said, needs to focus on its global efforts and technological offerings rather than chase acquisitions that do not align with its core business.
In general, TAFE paints a picture of AGCO as a jumble of pieces that are not acting collectively and the board has failed to create a coherent strategy to pull it all together.
A further detail buried within the text refers to the 13D/A filing TAFE made with the Securities and Exchange Commission, which many took as the prelude to a hostile takeover bid by the company of AGCO.
The Indian company has stressed that this is not the case and states that it remains “very open to reaching a negotiated resolution with the company that would set AGCO on the right course towards value creation.”
Despite this olive branch, TAFE is insistent on governance changes and ends the letter by noting that “should the Company continue to ignore our concerns, we would have little choice but to consider all options to reconstitute a portion of the board”.
That sounds very much like fighting talk and the dispute between the two has undeniably stepped up a gear.
