TAFE Pulls A Surprise On AGCO, Gives Up Board Position

In the fast-evolving environment, the winning strategy is defined by smartness. How else could one describe this move by Tractors and Farm Equipment (TAFE).  The Chennai-based tractor company has been engaged in a legal row with its U.S. Partner AGCO Corporation. Both have cross-holding in each other. TAFE is the largest shareholder in AGCO. They have been partners for over six decades. Yet, AGCO has chosen to raise an avoidable dispute with TAFE over the ownership of Massey Ferguson brand. The U.S. company, it may be recalled, confirmed the termination of its commercial agreement with TAFE. Even as the dispute has taken a legal route, TAFE is understood to have decided that it would not nominate its representative to the board of AGCO. TAFE, being the largest single shareholder with over 16% stake, has the right to have a nominee on the board of AGCO. But, it has chosen not to have its nominee on the board. Well, this should give the Chennai-based tractor company quite an elbow-room to chalk out an independent course in the marketplace. How will this strategy play out? One has to wait and watch. In the meanwhile, TAFE has voluntarily agreed to extend its `standstill commitment’ till June this year. The agreement essentially is about freezing TAFE holding in AGCO. The termination of the commercial agreement with TAFE is interpreted as a move by the U.S. firm to force TAFE to sign a permanent `standstill agreement’. In a new normal environment, Indian firms aren’t shying away. Indeed, they are out to establish their multi-national aspiration.