Duluth-based AGCO reaches agreement with activist shareholder TAFE

Meanwhile, AGCO, which has maintained a relationship with TAFE for about 60 years, rejected TAFE’s claims about mismanagement.

In April 2024, AGCO announced it would no longer buy TAFE equipment or sell TAFE parts. AGCO Chief Financial Officer Damon Audia said at the time the business amounted to about $172 million a year, mostly low-horsepower tractors. Audia cited the cancellation of the business arrangement as the reason for TAFE’s complaints and noted that it had cut those business ties after “extensive discussions with TAFE over multiple years concerning TAFE’s continued poor operational performance as a supplier, brand licensee and distributor.”

But until now, AGCO said it treated that move “as separate from the TAFE investment in AGCO and its representation on AGCO’s Board.”

Under the agreements announced Tuesday, TAFE will give up its seat on AGCO’s board of directors, and both companies will terminate all commercial agreements with each other. TAFE will also obtain exclusive rights in India, Nepal and Bhutan to the iconic Massey Ferguson brand of agricultural machinery, which AGCO previously claimed in a lawsuit that TAFE conducted “unauthorized” use of. All legal proceedings between the two companies will be dropped as well, among other terms.

TAFE did not respond to The Atlanta Journal-Constitution’s request for comment by the time of publication, and AGCO declined to comment and referred the AJC back to a news release.

AGCO has more than 700 employees in Georgia and over 27,000 worldwide, and owns several subsidiaries that manufacture agricultural machinery.

Shareholder activism — activity taken by large company shareholders to influence how publicly traded companies run — has increased since the start of 2024, according to the Harvard Law School Forum on Corporate Governance. Large shareholders do this mostly with the intention of increasing the value of their investment.

Wei Jiang, a professor of finance at Emory University’s Goizueta Business School, said it’s not uncommon for companies that are business partners to hold shares in one another, like in the case of TAFE and AGCO.

“When two firms form a strategic alliance, as a way to show that they will be in the same boat with common interests, they might also resort to this mutual ownership,” Jiang said. But she noted that it’s not as common for two companies that are already competitors on some level to decide to hold shares of one another.

This article has been updated with additional comments.