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Spain has branded a Hungarian consortium backed by the prime minister Viktor Orbán as a threat to its national security as Pedro Sánchez’s government intervened to block a €600mn bid for a Spanish trainmaker.
Hungary’s Ganz-Mavag consortium vowed to take legal action against Spain for vetoing its takeover bid for Talgo on the grounds that it entails “risks to national security and public order”, a highly unusual step within the EU.
The takeover attempt has become the latest conflict between EU member states and the illiberal Hungarian premier, who has maintained some of the closest relations with Russia of any western leader despite its full-scale invasion of Ukraine.
Sánchez’s Socialist-led government said on Tuesday that it would not authorise the €619mn bid to acquire Talgo from Ganz-Mavag, a consortium backed by an investment arm of the Hungarian state.
The Spanish economy ministry did not elaborate on the national security risks and said the analysis on which the decision was based was “classified”.
It said its intervention was in line with national and EU law on foreign investment, the EU internal market and the free movement of capital. Under EU law, member states can block deals on public security grounds in specific circumstances.
Ganz-Mavag said it would take legal action in Spain and at EU level “to defend the legitimacy of its voluntary offer for Talgo”, adding: “This is an arbitrary decision by the government on a non-strategic company, which has no security clearance and therefore lacks technology that could impact on national security.”
Both Spanish and Hungarian media have linked the decision to Madrid’s concern over Orbán’s ties to Russia and the potential threat to critical rail infrastructure.
“They have no proof for this so this is hardly more than political bluff,” wrote the pro-government daily Vilaggazdasag. The Spanish government declined on Wednesday to comment on any potential concerns over Russia.
Forty-five per cent of the Ganz-Mavag consortium is in the hands of Corvinus, a state-owned development finance institution that co-invests with Hungarian companies abroad.
The other 55 per cent is owned by Hungarian trainmaker Magyar-Vagon, which is controlled by a private equity fund owned by an executive named Csaba Törő and managed through a subsidiary by Hungarian oil company Mol.
State-owned Eximbank, one of the main overseas financing tools for the Hungarian government, agreed to provide a €345mn loan to Ganz-Mavag, equalling more than half of the offer price.
Talgo’s board of directors greeted the offer warmly when it was made in March, expressing a “favourable opinion” on the €5-a-share price and describing it as attractive and “friendly”.
But Óscar Puente, Spain’s transport minister, said that month that the government would do “everything possible” to prevent the takeover. Government officials have described Talgo as strategic because of its access to information on Spain’s railway network.
The Spanish Association of Minority Shareholders of Listed Companies said it would also launch legal action against the Sánchez government in Spain and Brussels. It said the veto was harmful to Talgo shareholders, arguing the process was “riddled with irregularities”.
Talgo’s biggest shareholder is Trilantic, an investment fund that owns nearly 40 per cent of the trainmaker. It did not respond to a request for comment.
Additional reporting by Carmen Muela in Madrid
