For the last few months it seems like every couple of weeks I have a news release in my inbox from Tractors and Farm Equipment Limited (TAFE) about demands they are making of AGCO — the loudest of which is that AGCO separate the board chairman and CEO roles. 

TAFE has 16.3% ownership in AGCO and is AGCO’s largest shareholder. 

TAFE’s battle cry in all of this seems to be, “Since Eric Hansotia began holding both the Chairman and CEO roles in 2021, AGCO has suffered from strategic missteps and ineffective execution.”

Among other things, TAFE points to AGCO’s declining sales in high horsepower tractors. Last I checked, that’s not exactly a uniquely AGCO problem. Through November, 100+ horsepower tractor unit sales in the U.S. are down 16.4% and in Canada sales are down 10.3%. 

Last week, ahead of AGCO’s 2024 Analyst Day, a communications firm for TAFE sent out another press release listing 10 ‘critical strategic questions’ it wanted AGCO to address during the meeting. When I saw the email come across, my initial thought was, “What now?” My gut feeling about all of this has been that it’s just noise and there’s not much to it. I reached out to several AGCO dealers and asked just that: “As an AGCO dealer, is there any substance to their claims? Is it just noise?”

By and large, from what dealers told me it seems like it’s likely just noise that will continue to be a thorn in AGCO’s side. 

As a little bit of background on the situation, one dealer offered this: “TAFE is upset and emotional over losing the manufacturing contract for many of AGCO's utility tractors.” The two companies have been to court over it in India, and TAFE lost the case, he explained, adding that TAFE also is alleged to have violated its contract by applying for a copyright on the Massey Ferguson logo in India — essentially trying to steal the brand name.

“Almost all of the things that TAFE claims AGCO needs to do, like splitting up the CEO and Chairman roles, are things that TAFE itself has not and will not do. From the outside looking in, it appears that when a billionaire gets told no, they have no idea how to handle that,” he said. Notably, this was alleged behavior according to a dealer I contacted, as Lessiter Media has no direct knowledge of the ongoing situation beyond what has been provided by the two entities.

As the story goes, AGCO CEO Eric Hansotia and Mallika Srinivasan, TAFE CEO, got off to a bad start and it’s only gotten worse. At a board meeting, Srinivasan demanded that AGCO install another co-CEO or president who she could work with. As we know, that didn’t happen. And as one dealer puts it, “So the pissing contest exploded and Eric stopped orders of TAFE built 2600H Series tractors. Some say she stopped or slowed down parts shipments.” 

So, while there is some concern among AGCO dealers because TAFE is AGCO’s largest shareholder, as one dealer put it, “it is just a lot of crying over spilt milk.”

What do you think — does Srinivasan have a point or is it just distracting noise?