Ben Pawlowski
THE Spanish government has blocked a €600m bid from a Hungarian consortium for the train manufacturer Talgo, citing ‘risks to national security and public order’.
“The cabinet has agreed today to not authorise the foreign direct investment in Talgo by Ganz-Mavag Europe Private Limited”, the finance ministry said in a statement. “The analysis has determined that authorising this operation would entail risks to national security and public order”.
Hungary’s Ganz-Mavag consortium, backed by the country’s populist leader Viktor Orban, has vowed to appeal before the Administrative Chamber of the Supreme Court and seek ‘compensation for all damages caused’ after the decision.
They slammed the veto, saying: “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”.
Talgo’s shares plummeted by as much as 10% in the aftermath of the decision, which has provoked the latest conflict between the populist pro-Putin Hungarian government and EU member states.
Although the Spanish finance ministry refused to disclose the analysis on which their decision was based – citing the material as ‘classified’ – it is widely believed that fears over the Hungarian government’s close links to Russia and the potential threat to critical national rail infrastructure influenced the veto.
It said its intervention was in line with national and EU law on foreign investment, which allows member states to block deals on public security grounds.
45% of the Ganz-Mavag consortium is owned by Cornivius, a state-owned development finance institution that co-invests with Hungarian companies abroad.
The consortium first made their offer in March, which was greeted by Talgo’s board of directors as ‘attractive’ and ‘friendly’.
However, transport minister Oscar Puente vowed to do ‘everything possible’ to block the takeover.
Talgo’s main consumer is Renfe, the Spanish state-owned railway operator.
The Spanish Association of Minority Shareholders of Listed Companies has vowed to launch legal action against Pedro Sanchez’s Socialist-led government, claiming the veto is ‘harmful’ and ‘riddled with irregularities’.
