Indian tractor maker presses AGCO to refresh board, consider alternatives

FILE PHOTO: People look at AGCO equipment as they attend National Farm Machinery show in Louisville
FILE PHOTO: People look at AGCO equipment as they attend National Farm Machinery show in Louisville, Kentucky, February 12, 2016. REUTERS/Meredith Davis/File Photo

March 4, 2021

By Svea Herbst-Bayliss

BOSTON (Reuters) – Tractors and Farm Equipment Limited, the largest investor in AGCO Corp, on Tuesday again pressed the agricultural machinery maker to refresh its board and consider strategic alternatives as it risks falling further behind its rivals.

Indian tractor manufacturer Tractors and Farm Equipment, known as TAFE, said in a U.S. regulatory filing that it made a presentation to the company in which it outlined AGCO’s weakening long-term competitive position and urged immediate action.

“We believe that material risks exist for AGCO’s shareholders in the inevitable cycle downturn and that the Board should proactively focus on minimizing such risk now,” TAFE, which is AGCO’s largest shareholder with a 16.2% stake, said in the presentation.

AGCO was not immediately available for comment.

TAFE is calling on the company to appoint three new independent directors to the board, appoint a new lead independent director with strong board experience and form a committee to oversee the execution of a strategic plan.

AGCO’s recent stock price gains have been fueled by macro economic tailwinds in the agricultural sector but mask the company’s weakened stature compared with rivals like John Deere and Kutoba, TAFE said.

AGCO, which is valued at $9.6 billion and is headquartered in Duluth, Georgia, has seen its stock price surge 103% in the last 52 weeks and closed trading at $129.11 on Tuesday.

“Strategic missteps have resulted in a deteriorating market position in Brazil, continued sub-scale presence in North America (a key market) and an unsuccessful investment initiative in China,” TAFE said in the presentation, which was attached to the regulatory filing.

TAFE, which has previously raised similar concerns with AGCO, has been an owner for seven years and paid an average $48.13 for its stake.

(Reporting by Svea Herbst-Bayliss; Editing by Cynthia Osterman)