Citing strategic interests and national security reasons, the Spanish Council of Ministers on Tuesday rejected the acquisition of train manufacturer Talgo by Hungarian company Ganz-MaVag for €619 million ($691 million), Spanish press reports.
“The cabinet has agreed today to not authorize the foreign direct investment in Talgo by Ganz-Mavag Europe Private Limited,” the economy ministry said in a statement. “The analysis has determined that authorizing this operation would entail risks to national security and public order.”
The move from Madrid sent the shares crashing 10 percent in reaction to the news.
According to the Spanish ministers, this is a national security and geopolitical issue, especially amidst ongoing Russian aggression. On the one hand, Talgo has technology that affects the military mobility of Baltic countries; on the other hand, the Hungarian bidder is accused of having Russian and right-wing links because it is backed by the Hungarian government, which is a baseless claim since Hungary is a NATO country.
The Spanish side says it wants to put an end to a Herculean struggle that has been going on since November last year.
A spokesperson for Ganz-Mavag in Spain signaled his company would “take legal action, both in Spain and in Europe” against Madrid’s decision.
Now, the Spanish transport minister is trying to find an alternative buyer for Talgo, which some newspaper sources have suggested could be the Czech company Skoda. However, Skoda has informed train manufacturer Talgo that after exploring the possibility of an industry merger, it has decided not to make a takeover bid.
“Although Talgo’s board of directors welcomed the Hungarian offer, the government is blocking the deal by applying Covid-era legislation, citing its strategic importance,” states a Spanish article, which writes that the European Court of Justice would certainly rule in Hungary’s favor if the case came before it, even if Madrid is ideologically closer to it than Budapest.
