On Tuesday, the government vetoed the entry of the Hungarian group. Ganz Mavag (Magyar Vagon) in Talgoon which it had launched a public takeover bid to control 100% of its capital for 620 million euros, because it considers that there are “insurmountable” strategic interests and reasons of national security.
At its first meeting after the holidays, the Council of Ministers endorsed the position of the Foreign Investment Council – a multi-ministerial body headed by the Ministry of Economy – against the takeover for these “insurmountable” reasons of national security, which the government has not revealed why it also decided to declare the information contained in this case classified. After this refusal that leaves the future of Talgo in suspense, Hungarian consortium to appeal “in all possible cases” this decision, both in Spain and in Brussels, sources from the group told EFE.
The Minister of the Presidency, Felix Bolanosinsisted that this decision is taken to “protect the interests and security of Spain”, considering Talgo “a strategic company”. “When We must say “no” to protect the interests of Spain“We do,” he adds.
After the news was published by El Correo on Tuesday, the National Securities Market Commission (CNMV) suspended Talgo’s activities shortly after noon, then lifted them two hours later. The market took the end of the operation badly and the shares of the Spanish railway manufacturer fell by 10% after the suspension was lifted. Talgo’s main shareholders supported the sale to Magyar.
From the beginning, the operation met with strong opposition from the government, which did not look favorably on the close relations between some of the most senior leaders linked to Ganz/Magyar and the executive of the Hungarian Prime Minister, the controversial Viktor Orbán. The most explicit was the Minister of Transport and Sustainable Mobility, Oscar Bridgewho even spoke of links with the power in Vladimir Putin’s Russia.
The visible face of the operation has been businessman Andras Tombor, who, in a press conference in Madrid, denied that the operation had political connotations and asked that it be resolved in the economic and industrial sphere. Given that the operation exceeds 500 million euros, it has had to be analyzed by the Spanish government within the framework of the so-called “anti-takeover shield” legislation that expires at the end of the year and that was approved during the pandemic to prevent foreign capital from entering Spanish companies at advantageous prices.
Furthermore, the Ministry of Economy stressed – in a note published after the Council of Ministers – that it had rejected the purchase “in full respect of Community law and the competences of the European Union in matters of foreign direct investment, protection of the internal market and free movement of capital”. After the rejection of the Investment Council, the process of analysis of the public purchase offer of the CNMV also declines.
On April 4, the Hungarian consortium requested authorization from the CNMV for the public takeover bid on Talgo, targeting 100% of its capital for a total amount of 619.3 million euros and at a price of 5 euros per share. The operation was guaranteed by a Hungarian bank.
Different voices within the government have expressed their opposition to this purchase from the beginning and have defended that Talgo is a strategic company, with a unique technology in the world and that plays a fundamental role in rail transport. For this reason, they have sought to create a Spanish alternative, in which they have tried to involve Criteria, the investment arm of La Caixa; or the Escribano group, shareholder of Indra; as well as other manufacturers, such as the Czech manufacturer of capital goods Skoda (no relation to the make of the car), which He even proposed a merger, rejected by Talgo.
The bidding company is composed of Ganz-Mavag (55%) and Corvinus (45%), the latter owned by the Hungarian state through the Ministry of Economy. Ganz-Mavag, for its part, is fully owned by Magyar Vagon, owned by a venture capital fund (Solva II), whose main shareholder, with 50%, is Hungarian citizen Csaba Töro. Behind this consortium – which has consolidated itself in the railway sector thanks to privatisations in this central European country – are DJJ and András Tombor, who was Orbán’s national security advisor during his first executive, between 1998 and 2002.
Talgo’s main shareholder is Pegaso Transport Internationalwith 40.03% of the capital, a conglomerate that includes the British fund Trilantic (founded by two former executives of Lehman Brothers), the Oriol family (descendants of the founders) and Torreal, the company of Juan Abelló. They all want to exit the capital.
The Torrente Blasco family holds minority interests, through TorrBlas (5%); the insurance company Santa Lucía (2.96%) and the Norwegian bank Norges (2.79%), among others. The rest is listed on the stock exchange. At the end of 2023, Talgo’s order book stands at 4.223 million eurosits historical maximum, driven above all by the extensions of existing contracts. 80% of the activity is international.
Although it is a reference in the railway construction sector – especially for its technology that allows it to operate on different track widths – its industrial capacity is insufficient to meet a similar portfolio of orders, which Magyar claims to be able to solve with its seven workshops-factories in different parts of Hungary.
