This veto was decided in the name of “national security”. Talgo builds high-speed trains for Renfe and also for the future French operator Le Train.
The Spanish government on Tuesday blocked, in the name of the country’s “national security”, a takeover attempt by a Hungarian company linked to Prime Minister Viktor Orban’s government of Spanish train manufacturer Talgo.
Based on a recent law intended to protect Spanish interests from foreign investments in sensitive sectors, the socialist government of Pedro Sánchez has decided to block a takeover bid by the Hungarian group Ganz Mavag Europe Private Limited targeting Talgo, the main supplier of national railway company. Renfe, the Spanish Ministry of Economy announced in a press release.
“Risks to national security”
The decision was taken on Tuesday morning during the first meeting of the Council of Ministers after the summer holidays, after the government considered, according to the press release, that the authorization of the this operation.
The Ministry does not explain the precise reasons for this refusal, stating simply that the Council of Ministers declared the information on which the decision is based “classified”.
The rumor of a government veto gained momentum late Tuesday morning, when the Spanish stock market watchdog (CNMV) announced that Talgo’s listing on the Madrid Stock Exchange was suspended pending important information about the company.
A few minutes later, the press release of the Ministry of Economy confirmed the veto of the government.
“Anti-seizure shield”
The Council of Ministers decided, in the press release, “not to authorize foreign direct investment in Talgo SA from Ganz Mavag Europe Private Limited, in order to protect the strategic interests and national security of Spain”.
“For the government, Talgo is a strategic company in an important sector for the economic security, territorial integration and industrial development of Spain,” the press release continued.
So Madrid took advantage of its “anti-takeover shield”, deployed since the beginning of the Covid-19 crisis, which makes the green light from the State mandatory before foreign interests can acquire more than 10% of a company considered to be the priority of the Spaniard.
The government of Pedro Sánchez has been concerned since Talgo announced at the beginning of March that the company was the subject of a takeover bid for 100% of its capital from this Hungarian company.
For its part, Talgo expressed a “favorable preliminary opinion” for the operation in view of the price of five euros per share offered by the Hungarian consortium, a price considered “attractive to shareholders”, valuing the manufacturer at 620 million euros. At the same time, he refused an offer to buy Czech Skoda.
The Spanish media immediately pointed out that Ganz Mavag Europe Private Ltd was a consortium that brought together the Magyar Vagon group and the Hungarian public fund Corvinus Zrt, controlled by the government of Budapest. The press release from the Ministry of Economy makes no reference to this point.
Supplier of Renfe and Le Train
Madrid introduced controls on foreign investments in strategic sectors in 2020, initially to protect its companies weakened by the health crisis, especially in the “critical infrastructure”, health and security sectors.
The mechanism was activated in particular in August 2021, when the Australian fund IFM launched a partial takeover bid for the Naturgy energy group. Madrid then validated this operation, enabling IFM to acquire almost 11% of the Spanish giant.
Founded in 1942, the Talgo group is the main supplier of trains for the Spanish railway company Renfe. The company, whose main shareholder is the Trilantica investment fund, exports in particular to Germany, Saudi Arabia, Denmark, Egypt and the United States.
The future French operator Le Train chose it to provide high-speed trains that will circulate in the Great West.