(Bloomberg) -- AGCO Corp., a maker of tractors and other agricultural equipment, is facing demands for a board shakeup from its largest shareholder, people familiar with the matter said.
Tractors and Farm Equipment Ltd. is seeking to replace AGCO directors outside of the annual meeting cycle through a consent solicitation process, according to the people, who asked not to be identified because the information was private.
TAFE says AGCO has wasted billions of dollars on bad deals and has been outperformed by rivals such as Deere & Co., the people said. It also says the company has engaged in poor governance practices, including having a combined chairman and chief executive officer, they said.
India-based TAFE owned a 16% stake in AGCO as of April, according to data compiled by Bloomberg. AGCO’s shares have fallen 33% in the last 12 months, giving the company a market capitalization of about $6.5 billion and valuing TAFE’s holding at more than $1 billion.
“As part of the company’s continuing review of its business and operations, in April 2024 AGCO gave notice of termination of certain commercial agreements with TAFE, which led to litigation by TAFE,” a representative for Duluth, Georgia-based AGCO said. “It is disappointing that TAFE has now chosen to respond by threatening the use of the consent solicitation process in response to this commercial dispute.”
AGCO, which manufactures tractors and crop combines under brands including Fendt and Massey Ferguson, notified TAFE in April that it was terminating their commercial relationship. AGCO said in a filing at the time that it bought about $171.6 million of tractors and components from TAFE in 2023.
The agricultural industry has been under pressure from sliding prices for key crops including corn and soybeans, which have damped farmer demand for new tractors and harvesters.
AGCO said in June that it would slash its salaried workforce by as much as 6% as a first step of a broader effort to streamline its operations amid the weakening demand. Rivals Deere and CNH Industrial NV have also announced plans to cut workers as part of efforts to cope with the downturn.
(Adds comment from AGCO in fifth paragraph.)
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