India-based TAFE is calling for a strategic refresh, expressing “serious concerns” with the manufacturer’s acquisition-based growth strategy.
Rising tensions between Agco and its top shareholder could ultimately impact the direction of the company’s strategic plans to focus on technology and precision agriculture over traditional equipment manufacturing.
“Replacing AGCO’s independent directors with TAFE’s hand-picked nominees would serve only to assist in prioritizing the interests of TAFE and its operations above the interests of AGCO’s other stockholders,” Agco wrote in response to TAFE’s filing.
Agco terminated certain commercial agreements with TAFE in April, citing the India-based manufacturer’s “poor operational performance as a supplier, brand licensee and distributor.” The company said TAFE, which sued in response, is now also retaliating by pushing for board changes.
“It is disappointing that it appears that TAFE has now chosen to respond to a commercial decision by threatening the use of the consent solicitation process in an attempt to pressure AGCO,” the company said.
TAFE, which had worked with Agco for more than 60 years, claimed in its filing that the Georgia-based manufacturer has wasted hundreds of millions of dollars on costly acquisitions, shifting “valuable time and attention away from internal innovation and growth.”
The firm said Agco’s second quarter results show its “inability to adapt in the face of reduced demand.” TAFE is also pushing for a change to the executive structure, including separating the roles of chairman and CEO.
Agco reported a 15.1% sales decrease in the second quarter over the previous year. Agricultural equipment manufacturers, including Agco, Deere and CNH, have weathered broad demand declines as farmers pull back on purchases in a slower economic environment.
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