like a pregnancy, It has been almost nine months since the interest of the Hungarian company Magyar Vagon in acquiring the Basque railway manufacturer Talgo was revealed. And, as such, this gestation It has gone through different phases until reaching the current point, which is none other than an abortion carried out by the Spanish government itself, and which was made official this Tuesday. The executive decided to stop the operation for reasons of national security, since there are clear suspicions about the relations of this company with Russia.
This decision caused a sharp drop in Talgo’s share price. Specifically, At the close of trading on Tuesday, it had lost 8.7%. of its value, falling below 4 euros per share. It should be remembered that the public purchase offer launched by the Magyar group valued the Spanish company at 619 million euros, or 5 euros per share.
However, the market never really believed in the success of the operation since during these nine months, at no time did Talgo shares reach this level. At its highest level, last February, it reached a peak of 4.78 euros, always below the purchase price. And the doubts about whether or not the government would allow the Hungarians to enter Talgo were never completely dispelled, always offering an entry opportunity to investors who were betting on an agreement. “The news is negative, even if it has been partly discounted since the share was trading at a 15% discount to the proposed price,” Banco Sabadell points out.
Despite the government’s veto, the stock market’s reaction also gives clues that the game is not over and that there could be other chapters since Talgo’s shares, despite the fall, continue trading above previous levels to the interest of Magyar Vagon, which is remembered as far back as November 13, when the Basque industrial company operated in the euro zone 3.7 (see graph).
The Hungarian group also reacted to Moncloa’s response by warning that it would appeal the decision, as did Talgo shareholders, who saw their options to sell their shares at 5 euros per share cut. The market could be partially unaware of whether one of these possibilities materializes or whether a new player enters, as has already been said with Criteria, CAF itself or, more recently, Skoda, which proposed a merger of its activities that did not convince Talgo. management, which demanded that, in accordance with the law on takeover bids, it make a counter-offer for the Basque company.
“After this decision, the economic options for Talgo shareholders are reduced since the only thing left would be Skoda’s proposal to combine their activities without compensation,” says Bankinter. “We consider this option to be not very viable, at least with the initial conditions, although we do not rule out that the proposal could be completed by other players such as Escribano or Criteria, which could increase the chances of success,” they point out in Location 4.
While this is developing, what is certain and important for investors is that analysts are not deteriorating their valuations, which remain at 4.83 euros on average, which opens up a potential of more than 20% for their titles after the fall of this Tuesday. “The government’s veto will lead to the dissolution of Pegaso [Trilantic, Torreal y Oriol] give its partners the freedom to sell securities on the market, which could put pressure on the value,” Bankinter underlines.
“On the operational level, the Avril high-speed train, its flagship product, showed deficiencies this summer after multiple breakdowns and the delivery schedule of a portfolio of 4,014 million is difficult to execute with the current production capacity,” adds Bankinter. “On the commercial level, it is experiencing the best moment in its history, with a record order book and excellent prospects for additional hiring,” they say in Renta 4. “On the other hand, the company’s main problem is capacity since we believe that it must seek a solution to manage the order book and that is why we consider that it could enter into subcontracting agreements with third parties, which is common in the sector,” they add.
Analysts have not changed their recommendations either. Only 12.5% of the analyst houses that follow it indicate that it is the right time to sell their shares while 37.5% suggest opening positions. Half of the total prefer to keep them if they are already open. “The high order book foresees a strong growth in sales, Ebitda and margins for the coming years”, they point out in Renta 4. “That said, even if from a fundamental point of view Talgo is in an excellent moment, until “If we do not see a solution to the capacity problem, the price will not reflect its true value”, they conclude in Renta 4.
So, if we look at the net profit forecast, the expert consensus collected by FactSet estimates that it will close the year above 26 million euros, just over double what it had announced in 2023. For 2025, the forecast is 38 million euros, which will be above 50 in 2026. When presenting the results for the first half of the year, they announced an increase in net debt to 357 million due to greater working capital, which multiplied by 3.5 million.
