Tractors and Farm Equipment Ltd (TAFE) announced on Tuesday that it has reached a comprehensive out-of-court settlement with US-based AGCO Corporation on all matters related to the Massey Ferguson brand, commercial issues and shareholding, thereby ending their corporate feud.
As per the announcement, under the settlement reached, ownership of the Massey Ferguson brand will rest with TAFE as the sole and exclusive owner for India, Nepal and Bhutan.
TAFE further said that it will hold all rights, title and interest in ”Massey Ferguson” and related trademarks and all goodwill associated therewith.
Besides, it informed that TAFE will buy back AGCO’s shares in itself which amounts to 20.7 per cent of the domestic tractor maker’s equity, for a consideration of USD 260 million – making TAFE a wholly-owned subsidiary of the Amalgamations Group, a diversified industrial conglomerate, headquartered in Chennai.
It also said that TAFE will also retain its shareholding in AGCO at an ownership level of 16.3 per cent and not exceed it, while participating in AGCO’s future buyback programs to maintain its proportionate ownership subject to certain exceptions, it stated.
The Chennai-based firm said that as part of the settlement, TAFE will support AGCO by voting its shares in favour of all the recommendations of AGCO’s Board of Directors at shareholder meetings, subject to certain exemptions.
Besides, TAFE will remain a long-term investor in AGCO, it added.
While all commercial agreements between TAFE and AGCO will be mutually terminated, TAFE will honour outstanding supply orders and continue to supply parts for all markets on agreed terms, it stated.
"All ongoing legal proceedings will be irrevocably and unconditionally withdrawn. A consent decree will be sought in the three suits relating to the Massey Ferguson brand, currently pending before the Madras High Court in India,” the company said.
It also said that 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.
"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," TAFE Chairman & Managing Director Mallika Srinivasan said.
"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," she added.
TAFE, a leading tractor manufacturer in India and the third largest in the world, said it has been producing Massey Ferguson tractors since 1960, with an annual production of over 100,000 units.
The Indian company, which exports tractors to more than 80 countries, became AGCO’s largest shareholder in 2012.
Last year, US agricultural equipment maker AGCO Corporation announced that it has terminated multiple agreements with TAFE with immediate effect.
The terminations included the Massey Ferguson brand license agreement, a distributor agreement for India, Nepal, and Bhutan, and an intellectual property license agreement for India, Nepal, Sri Lanka, Bangladesh, and Bhutan.
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