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Spain Fears Russian Influence: Hungarian Investor Rejected from Talgo Due to Security Concerns

Spain Fears Russian Influence: Hungarian Investor Rejected from Talgo Due to Security Concerns
foto: Talgo / Public domain/Talgo
03 / 09 / 2024

A major disruption has occurred in the world of railways. The Spanish government has blocked the Hungarian group Ganz-Mavag's plan to acquire the legendary company Talgo. The reason? National security and fears of Russian influence. The Hungarian investor, of course, denies these claims, but the concerns of Spanish authorities prevailed. Talgo's shares plummeted by 10% following the rejection.

Last Tuesday, the Spanish government rejected an offer from the Hungarian group Ganz-Mavag to acquire Talgo, a leading Spanish rolling stock manufacturer. As previously reported by RAILTARGET, the decision was justified by concerns over the state's strategic interests, national security, and the potential loss of control over unique railway technologies.

In March 2024, Spanish Minister of Transport and Sustainable Mobility Óscar Puente declared that he would "do everything possible" to ensure that Talgo would reject the offer. It is important to note that the Spanish government is one of Hungary's biggest critics within the EU, and there were fears that Russian investors were secretly backing the deal. Indeed, there was a connection through the company Ganz-MaVag International Kft. Although the Russians sold their stake in the company following the Russian invasion of Ukraine and the subsequent sanctions, suspicions of ongoing hidden ties persisted.

The Spanish government exercised its right under the EU's framework for foreign investment control, enforced by the National Securities Market Commission (CNMV) in Spain. The CNMV, together with the Directorate-General for International Trade and Investment of the Spanish Ministry of Economy, convened the Foreign Investment Council and presented the government with a recommendation to reject the investment.

Following the decision, Talgo's shares immediately dropped by 10%. The Hungarian consortium had already announced plans for a judicial review of the decision, and now minority shareholders, feeling wronged, have joined the effort.

Attention will now shift to other potential bidders. These include Škoda Transportation, Stadler Rail, potential actions from the Polish government, and the possibility that Talgo might remain under Spanish ownership through the investment fund Criteria. Škoda Transportation's chances may be improving, as the company had previously announced plans through PPF to link and share production capacities with Talgo. However, no formal offer has yet been made.

In terms of security considerations, this is a unique decision. EU rules were originally designed to counter investment intentions from non-European economies, particularly those governed by non-market principles. Now, the Spanish government has applied these rules to an investment from another EU and NATO member state. Talgo, of course, collaborates with the government on the transportation of military personnel and materials, strategic energy resources, and other critical commodities. However, the connection to Russia remains unclear, and the Hungarian investor strongly denies any ties.

Source: Talgo; RAILTARGET

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