TAFE buys back AGCO’s 20.7% stake for $260 million

CHENNAI - Tractors and Farm Equipment Limited (TAFE) announced Tuesday it has reached a comprehensive settlement with AGCO Corporation (NYSE:AGCO), a $7.69 billion agricultural equipment manufacturer with $10.78 billion in trailing twelve-month revenue, resolving all matters related to brand ownership, commercial issues, and shareholding between the two companies. According to InvestingPro data, AGCO maintains a Fair overall financial health rating, with strong liquidity metrics.

Under the agreement, TAFE will acquire AGCO’s 20.7% stake in TAFE for $260 million, making TAFE a wholly owned subsidiary of the Amalgamations Group. The Indian tractor manufacturer will retain exclusive ownership of the Massey Ferguson brand in India, Nepal, and Bhutan, including all associated rights and trademarks. AGCO, which has maintained dividend payments for 13 consecutive years and currently trades at $103.16, demonstrates strong financial stability with a current ratio of 1.53.

TAFE will maintain its 16.3% ownership stake in AGCO and has agreed not to exceed this level, though it will participate in AGCO’s future buyback programs to maintain its proportionate ownership. The Indian company has also committed to supporting AGCO by voting its shares in favor of AGCO’s Board of Directors recommendations at shareholder meetings, with certain exemptions.

All existing commercial agreements between the companies will be terminated, though TAFE will fulfill outstanding supply orders and continue to provide parts for all markets on agreed terms. Both parties will withdraw all ongoing legal proceedings, including three suits related to the Massey Ferguson brand pending before the Madras High Court.

Mallika Srinivasan, Chairman & Managing Director of TAFE, said, "As we step into a new era in TAFE’s growth story, we recognize and cherish the long partnership we’ve had with AGCO, and continue to support AGCO as an engaged shareholder."

The settlement will take effect once both companies complete certain governmental and other processes in India relating to the share repurchase, according to the press release statement.

In other recent news, AGCO Corporation reported its first-quarter 2025 earnings, which exceeded analysts’ expectations with earnings per share (EPS) of $0.41, significantly higher than the forecasted $0.07. The company’s revenue also surpassed projections, reaching $2.1 billion against a forecast of $2.05 billion. Despite these positive results, Citi analysts downgraded AGCO’s stock rating from Buy to Neutral, citing a significant rally in the stock’s value and a balanced risk/reward scenario. Conversely, Truist Securities maintained a Buy rating on AGCO, highlighting growth opportunities for its Fendt brand in South America and North America. In another development, Citi analyst Kyle Menges increased AGCO’s stock price target to $110 from $90, reflecting confidence in AGCO’s ability to meet its 2025 targets despite tariff challenges. Bernstein analysts also raised AGCO’s stock price target to $99, maintaining a Market Perform rating, following AGCO’s strong first-quarter earnings performance. AGCO’s strategic focus remains on expanding its high-margin Fendt product line and integrating precision agriculture technology to improve profit margins.

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