Spain’s Talgo enters talks with rival bidder to Hungary-backed consortium

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A Spanish train maker that the Madrid government wants to keep out of the hands of a Hungarian consortium is in talks over a potential acquisition by a steelmaker from Spain.

Talgo, which was drawn into a political storm by a takeover bid backed by Hungary’s illiberal prime minister Viktor Orbán, said on Monday that it was negotiating with Sidenor, which is based in the Basque country.

In August, Spain’s government vetoed the €619mn Hungarian bid for Talgo on “public security and order” grounds, creating a new conflict between EU member states and Orbán’s Russia-friendly government.

The Spanish government had no immediate comment on the Sidenor talks. But when Sidenor first signalled its interest in Talgo last week, Carlos Cuerpo, Spain’s economy minister, said the government was ready to “accompany and help” Talgo find “a viable long-term solution”.

Talgo said that in its talks with Sidenor, it was “analysing a possible transaction that could involve the acquisition of a significant percentage of [Talgo’s] share capital or its entire share capital”.

The Hungarian consortium, known as Ganz-Mavag, has vowed to take legal action in Spain and at EU level “to defend the legitimacy” of its offer for Talgo. But there are signs that its interest in the acquisition is fading.

Spain has classified the documents explaining its veto and declined to comment on whether its concerns are linked to Orbán and his relationship with Russia, the closest of any western leader since Moscow’s full-scale invasion of Ukraine in 2022.

But a senior Spanish government official previously told the Financial Times that Madrid was concerned about the possibility of the Hungarian consortium acquiring train technology that Ukraine needs to strengthen its rail links with the EU.

The Ganz-Mavag consortium is 55 per cent owned by Hungarian trainmaker Magyar Vagon, with the other 45 per cent in the hands of Corvinus, a state-owned development finance institution that co-invests with Hungarian companies abroad.

In a sign of waning interest, the Hungarian state this month reduced Corvinus’s share capital, taking out a sum that was not far short of the entity’s planned contribution to the Talgo bid.

Talgo’s principal business problem is a lack of production capacity. It has been struggling to fulfil orders on time for new trains from clients including Deutsche Bahn and state-owned Spanish train operator Renfe.

Part of the Hungarian consortium’s pitch was that it could quickly increase Talgo’s factory capacity using the existing plants of Magyar Vagon.

As a steelmaker, Sidenor does not produce any trains itself and it is not clear how it would seek to alleviate Talgo’s production bottlenecks.

Eastern Europe is also a growing market for train sales. Last month Talgo president Carlos Palacio and the president of Polish rolling stock maker Pesa, Krzysztof Zdziarski, signed a preliminary deal for Talgo to provide its technology for high-speed trains in Poland.

Additional reporting by Raphael Minder in Warsaw