The Spanish government on Tuesday vetoed, in the name of the country’s “national security”, an attempt by a Hungarian company linked to the government of Prime Minister Viktor Orban to take over Spanish train manufacturer Talgo.
Relying on a recent law aimed at protecting Spain’s interests from foreign investment in sensitive sectors, the government of socialist Pedro Sánchez has decided to block the takeover bid by the Hungarian group Ganz Mavag Europe Private Limited for Talgo, the main supplier of the 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 break, as the Government considered, according to the statement, that authorising this operation “would entail risks for national security and public order”.
The ministry did not explain the exact reasons for this refusal, merely stating that the information on which the decision was based was declared “classified” by the Council of Ministers.
The rumour of a government veto became increasingly insistent on Tuesday morning, when the National Securities Market Commission (CNMV) announced that Talgo’s trading on the Madrid Stock Exchange was suspended pending important information about the company.
A few minutes later, the Ministry of Economy’s press release confirmed the government’s veto.
“Anti-OPA shield”
The Council of Ministers, the statement said, decided “not to authorize foreign direct investment in Talgo SA of Ganz Mavag Europe Private Limited, for reasons of protection of Spain’s strategic and national security interests.”
Madrid thus resorted to its “anti-takeover shield”, deployed since the beginning of the Covid-19 crisis, which requires obtaining the green light from the State before foreign interests can acquire more than 10% of a Spanish company considered a priority.
The Government of Pedro Sánchez had expressed its fears since Talgo announced at the beginning of March that the company was the subject of a takeover bid for 100% of its capital by this Hungarian company.
Talgo, for its part, had expressed a “preliminary favourable opinion” on the operation in view of the price of five euros per share offered by the Hungarian consortium, a price considered “attractive for shareholders”, valuing the manufacturer at 620 million euros. At the same time, it rejected an offer to buy the Czech Skoda.
Spanish media immediately pointed out that Ganz Mavag Europe Private Ltd was a consortium that included the Magyar Vagon group and the Hungarian public fund Corvinus Zrt, controlled by the government of Budapest. The press release of the Ministry of Economy makes no reference to this point.
Renfe and Le Train supplier
Madrid introduced controls on foreign investment in strategic sectors in 2020, initially to protect its companies weakened by the health crisis, particularly 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 energy group Naturgy. This operation was subsequently validated by Madrid, allowing IFM to acquire nearly 11% of the Spanish giant.
Founded in 1942, the Talgo group is the main supplier of trains to the Spanish railway company Renfe. The company, whose main shareholder is the Trilantica investment fund, exports mainly to Germany, Saudi Arabia, Denmark, Egypt and the United States.
It was chosen by the future French operator Le Train to supply the high-speed trains that will run through the Great West.
Source: BFM TV
