Spanish rolling stock manufacturer Talgo confirmed it has been approached with a bid from Hungarian holding company Ganz-Mavag Europe to acquire 100% of its shares. 

According to Talgo CEO Gonzalo Urquijo Fernández de Araoz the company, and its parent firm Pegaso Transportation International, have “expressed… intention to accept the offer.” 

But the Spanish government has stepped in with concerns over Ganz-Mavag Europe’s ownership and suspected links to Russia. 

Transport Minister Óscar Puente said he intends to do “everything possible” to stop the acquisition over the concerns. The acquisition requires approval from the Madrid government due to its strategically important position to the Spanish state. 

The issues stem from the owners of the Hungarian firm. Although 55% of Ganz-Mavag is owned by investor András Tombor’s Ganz-Mavag Holding, the remaining 45% is owned by Corvinus, a Hungarian state-owned investment vehicle. In Ganz-Mavag’s announcement of the bid it explained the parent company is “fully owned by the Hungarian State, whose ownership rights are exercised by the Ministry for National Economy of Hungary.”

Reports from Spanish media suggested the government is worried this link to Viktor Orbán’s government in Budapest could hint at backing from Russian sources, in violation of European sanctions on Moscow. 

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The state-owned wealth fund Corvinus was invested in Russia’s International Investment Bank until 2023, when Orbán and Hungary bowed to EU pressure to divest from Russian interests. 

Spanish legal documents also link the Hungarian company to MOL, Hungarian Oil and Gas Public Limited Company by way of at least two parent/holding companies via Solva Industrial. 

“The Hungarian State does not have any participation, directly or indirectly, in GanzMavag Holding Kft or in Solva II Magántőkealap,” the financial submission by Ganz-Mavag Europe stated. 

The offer

The offer from Ganz-Mavag is for 100% of 123,860,214 existing Talgo shares at €5 ($5.45) per share. 

The offer is for a cash deal worth a total of €619,301,070 ($675,565,674.99). 

Ganz-Mavag said this price represents a 14.42% premium on Talgo shares at the close of markets on 7 February 2024 – the date Spanish trading authorities suspended Talgo share trading, due to a press report on the preparation of a take-over bid. 

In response, Talgo’s board filed its official, but initial, response: “The Board of Directors of the Company has unanimously confirmed that the Offer is friendly and that the consideration offered is attractive for the Company’s shareholders, expressing a preliminary favourable view on such price offered”. 

The 7 March statement added that its parent firm was also considering accepting the bid. 

“The proprietary directors representing Pegaso Transportation International S.C.A. have expressed to the Board of Directors Pegaso Transportation International S.C.A.’s intention to accept the Offer with its entire shareholding in the Company,” it stated. 

FDI checks

The financial agreement, if it is passed by the Talgo board, is not the final hurdle for the Hungarian firm. 

As a wholly foreign entity, Ganz-Mavag must be granted foreign direct investment approval by the highest echelons of the Spanish government. 

“The Offer is subject to the prior authorisation of the Council of Ministers of the Spanish Government,” the firm acknowledged in its bid to market authorities. 

Documents must be submitted to the Directorate-General for International Trade and Investment of the Spanish Ministry of Economy, which then convenes the Foreign Investment Council and reports to the Council of Ministers.