8 March 1996

Agco wants Euro addition

By Peter Hill

NORTH American tractor maker Agco, Massey Fergusons parent company, is on the look out for another European business to add to its growing portfolio.

Speaking in London recently, one of the firms senior managers said Agco wanted to expand and had the cash to do so. But Jack Murdoch, vice-president sales and marketing for Europe, refused to be drawn on reports that Agco is bidding for the Finnish governments controlling interest in Valmet tractor maker Sisu Mach-inery. But he accepted that Agco would like to buy such a business.

"If the opportunity arose to buy the right manufacturer at the right price, we would be interested," he said.

Acquisition of farm tractor and implement makers in north America has expanded and diversified Agcos product line and increased its distribution network. Economies of scale and a larger share of European sales would be the main advantages of acquiring another brand to run alongside Massey Ferguson. It might also provide some useful distribution opportunities.

Agco wanted to buy Deutz-Fahr but was reportedly not prepared to pay as much as the Italian Same-Lamborghini-Hurlimann group did just over a year ago.

Massey Ferguson has made a valuable first full year contribution to Agcos 1995 results which showed "a substantial improvement" in revenues and profits, says Mr Murdoch.

Production of tractors at MFs Beauvais plant in France grew by just over 8% to more than 11,7000 units – its best since 1987 – while output of the Banner Lane factory in Coventry grew by nearly 38%.

It turned out more than 22,400 MF200 and MF300 tractors in complete form – 7.5% more than in 1994 – plus 40,000 knock-down kits for assembly by licensees to record the plants best performance for 14 years. Exports (including parts) are valued at £292m, £18m up on the 1994 figure.

lA number of special events, including daily displays and demonstrations at this years Royal Show, will celebrate the Banner Lane plants 50th year of tractor production. The Ferguson TE20 was first built there in July 1946. &#42

Agco-built MF9240, the result of just one of the firms previous acquisitions. Are more set to follow? A larger share of European sales would result.