Spain blocked the sale of train manufacturer Talgo to Hungarian company Ganz-MaVag Europe over national interests and due to suspicion links between Ganz-MaVag and Russian business circles. The Hungarian company said that it will bring the matter to the European Union.
Ganz-MaVag Europe started planning an offer for Talgo at the beginning of the year and in March it proposed a takeover bid for the whole company at a price of €5 per share, valuing the whole company at €619 million.
The matter was then evaluated by the Spanish government, namely the Foreign Investment Council, part of the Ministry of Economy. Ever since the bid was made, Spanish governmental circles were sceptical, casting doubts about Ganz-MaVag’s ownership, with Spanish Minister of Transport and Sustainable Mobility Óscar Puente strongly against the bid.
Spain delayed final decision on the bid until August 27, in the hope of receiving other offers for Talgo, with Switzerland’s Stadler Rail and the Czech Republic’s Škoda rumoured as possible buyers. The council also asked additional documents to Ganz-MaVag Europe.
Spain’s nervousness about the takeover stem from the dubious links of the Hungarian company. Spanish leading newspaper El País said that the Spanish intelligence made a report on the company that shows how it has direct links with Hungarian Prime Minister Viktor Orbán but moreover with Russia’s leading manufacturer of trains and rail equipment Transmashholding.
Senior executive of Ganz-MaVagg Europe András Tambor is considered quite close to Orbán. In addition, 45% of Ganz-MaVag Europe is owned by state-owned investment fund Corvinus International Investment, while the remaining 55% is of Magyar Vagon, a company with business connections still active with Transmashholding.
In the end, the Spanish Ministry of Economy spoke against the takeover, citing in a cabinet meeting that it “would entail insurmountable risks to national security and public order.” The Ministry mentioned that Talgo operates in a key sector for Spanish economic security and stressed that the decision was made following Spanish regulations and without breaching European Union’s laws.
Brussels confirmed that Spain didn’t breach European regulations, with a spokesperson of the Commission saying that “member states can restrict single market freedoms, such as the freedom of establishment and the freedom of movement of capital on public security grounds.” It is rather unusual for EU member states to block takeovers between European companies, due to the general trust within the block. However, Hungary has been seen as a maverick in European circles, with growing concerns about its democracy and Orbán’s closeness with Russia.
Ganz-MaVag Europe complained about the decision of the Spanish government and said that it will contest the decision at European level. According to János Lázár, Hungary’s Minister of Transport and Construction, Ganz-MaVag was trying to acquire Talgo in order to boost domestic production of train carriages, in order to shorten waiting times and not have to resort to acquire decommissioned old train cars from Western Europe.
