Spanish Socialists Let Company Shares Collapse After Blocking Hungarian Investment

Talgo train in Uzbekistan

The Spanish government’s controversial decision to block the Hungarian takeover of Talgo, a major Spanish train manufacturer, has sparked significant financial and legal consequences, reports Világgazdaság.

The veto, based on a COVID-era regulation and justified under the pretext of protecting national security, has led to a sharp decline in Talgo’s share price and left shareholders seeking legal action. As Hungary Today earlier reported, the Spanish government halted the acquisition attempt by Magyar Vagon, a Hungarian rail manufacturer, which would have secured Talgo’s future amid growing financial pressures.

The core of the issue lies in the Spanish government’s refusal to allow the Hungarian consortium’s EUR 619M bid to move forward, despite no evidence that the acquisition posed a national security risk.

This decision came at a time when Talgo’s valuation was already under strain, causing the company to lose 25% of its market capitalization in the following weeks. Talgo’s shares, which would have sold for EUR 5 per share under the Hungarian offer, are now trading at EUR 3.74, leading to a EUR 156M loss.

Hungary’s involvement in the Talgo case began with Magyar Vagon’s interest in acquiring the Spanish manufacturer as part of its strategic expansion in the European rail industry. However, the Spanish government’s actions not only blocked the takeover but also raised suspicions of political interference. As we also noted, there were vague allegations of a Russian connection behind the Hungarian company, but

the Spanish authorities failed to substantiate these claims, leaving many to view the situation as a political maneuver rather than a genuine security concern.

The Spanish Association of Minority Shareholders of Listed Companies (AEMEC) has since announced its intention to challenge the government’s decision in court, both in Spain and potentially at the Court of Justice of the European Union. They argue that the regulation, introduced during the pandemic, is no longer relevant and has inflicted unjustified damage on Talgo’s shareholders. AEMEC is preparing civil and criminal lawsuits to recover losses, emphasizing that the 8,000 shareholders of Talgo should not be penalized for the government’s arbitrary decision.

The Spanish government’s decision to block the Hungarian acquisition of Talgo has backfired, creating financial turmoil for the company and its shareholders. With legal battles on the horizon, the situation exposes the risks of political interference in international business dealings and leaves Talgo in a precarious position.

Spanish ‘Nyet’ for the Hungarian Takeover of Train Manufacturer Talgo