In what has been one of the more dramatic events in the machinery industry world this year, TAFE and AGCO have emerged from behind the curtains to announce that the ongoing dispute between them has now been settled and serenity restored.
The agreement is still subject to various local laws, but there are two major points which stand out.
The first is ownership of the ‘Massey Ferguson’ brand will rest with TAFE on an exclusive basis in India, Nepal, and Bhutan.
TAFE wins MF brand
TAFE had insisted that as it had represented and developed the MF brand within India since the 1950s, it was entitled to consider the famous red livery the property of the company. It went to court to establish and protect this right in law,
AGCO had strongly disputed what it considered attempted theft of a major trademark.
All the more surprising then that the corporation has handed over a world-famous brand in an almost casual manner.
However, attempting to use the MF brand itself in the countries concerned may well have proven commercially impractical.
AGCO breaks free
The second item of note is how the companies are disentangling themselves from the mutual shareholdings.
The overriding concern of AGCO for some time has been TAFE’s level of ownership in the corporation. Following the settlement, this particular spectre appears to have been exorcised from the AGCO boardroom for good.
TAFE has agreed to allow AGCO to buy its shares back from the Indian company, but retains the right to hold up to 16.3% of AGCO’s stock.
However – and this is meat of the agreement for AGCO – TAFE will no longer be entitled to a seat on the AGCO board and its shares will vote in accordance with the recommendations of the board.
Both of these provisions reduce any influence that TAFE may have on the running of AGCO, and in turn AGCO will sell its shares in TAFE back to the Indian company for $260 million.
Winding down
There are other provisions, including the agreement to stop calling each other rude names and that all current litigation will stop.
This dramatic turnaround has removed one of the more engaging commercial soap operas from the agricultural scene.
For AGCO, it achieves a complete independence from TAFE, while TAFE take formal ownership of the MF brand in India – something it has coveted for many years.
The settlement also puts paid to the rumours and gossip surrounding the relationship, especially those suggesting that TAFE wanted to buy the whole of Massey Ferguson from AGCO, not just the Indian end of the business.
Peace has been restored and each party can now move forward without worrying about the other’s activities or intentions.
