Spain blocks Hungarian takeover bid for train maker Talgo

Orban has been at loggerheads with Brussels for years over rule of law issues

By AFP

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A high speed train at the factory of Spanish train manufacturer Talgo, in Rivabellosa, Spain. — Reuters file

Published: Tue 27 Aug 2024, 8:14 PM

Spain's leftist government on Tuesday blocked a takeover offer from a Hungarian consortium for Spanish train manufacturer Talgo, saying it posed risks for the country's national security and public order.

The economy ministry said the cabinet decided "to not authorise direct foreign investment" in Talgo by Hungary's Ganz Mavag Europe "for reasons linked to protecting the strategic interests and national security of Spain".

"Talgo is a strategic enterprise in a sector key to Spain's economic security, territorial cohesion and industrial development," the statement said.

The government did not say so specifically in its statement, but it has made clear it is concerned about close links between the Hungarian companies and the country's Prime Minister Viktor Orban, who is considered an ally of Russian President Vladimir Putin.

Orban, whose country currently holds the rotating European Union presidency, ignited deep anger across the 27-nation bloc when he met with Putin in Moscow on July 5, just two days before Russian missiles blew up a children's hospital in Kyiv.

In office since 2010, Orban has been at loggerheads with Brussels for years over rule of law issues as his government tightened controls over the courts and the media, non-profit organisations and academics, and his country has paid a price in frozen EU funds.

Talgo announced in March that it had received a takeover offer from Ganz Mavag Europe, which groups Magyar Vagon and Hungarian state investment fund Corvinus Zrt.

While Talgo's management welcomed the offer, which valued it at 619 million euros ($690 million), Socialist Prime Minister Pedro Sanchez's government said it would be "vigilant" about defending the country's interests.

Founded in 1942, Talgo is the main supplier of trains to Spanish state railway company Renfe, including Spain's high-speed AVE trains, and as a result has access to key information about the country's railway network.

The company, which is known for its innovative wheel system that enables trains to switch track types at high speeds, exports to Germany, Saudi Arabia, Denmark, Egypt and the United States.

In the aftermath of the Covid pandemic, the Spanish government in 2020 strengthened its powers to block foreign acquisitions in what are considered strategic sectors, such as infrastructure, health and security.

The new rules require foreign groups wishing to acquire more than 10 percent of a Spanish company considered a priority strategic to request the green light from Madrid beforehand.

The Spanish government insists it is still open to investment.

"The Spanish government maintains as a priority attracting foreign investment, especially in those sectors and projects that are key to our foreign competitiveness."

Spanish stock market regulator CNMV briefly suspended trading in Talgo shares on Tuesday afternoon in the wake of media reports that the government was about to announce a veto of the takeover.