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A Hungarian train consortium backed by prime minister Viktor Orbán is withdrawing its takeover bid for a Spanish train maker after Madrid blocked the transaction on national security grounds, according to people close to the bidder.
Two days after Spain vetoed the €600mn offer for train maker Talgo by the Ganz-Mavag consortium, the Hungarian group decided on Thursday to take it off the table while it pursues legal action against Madrid’s decision.
But the people close to the consortium stressed that it wanted to explore other ways to work with Talgo — and did not rule out the possibility of returning with another bid if its legal challenges succeeded.
The takeover attempt has become the latest flashpoint 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.
The withdrawal of Ganz-Mavag’s offer is expected to be confirmed in a disclosure to Spain’s market regulator to be published on Friday, the people close to the bidder said.
The government of Spanish prime minister Pedro Sánchez blocked the €619mn bid because it said it entailed “risks to national security and public order” — a highly unusual justification within the EU.
The Socialist-led government did not elaborate on those risks and said the analysis on which the decision was based was “classified”.
Ganz-Mavag, a consortium backed by an investment arm of the Hungarian state, has vowed to contest the decision in the Spanish courts and in Brussels.
Under EU law, member states can block deals on public security grounds in specific circumstances.
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.
On Thursday, an EU spokesperson said that it was the prerogative of member states to make decisions such as Spain’s but that they must be justified and proportionate.
The spokesperson acknowledged that the Talgo case could end up being decided at the European Court of Justice in Luxembourg.
About 45 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.
Talgo’s board of directors welcomed Ganz-Mavag’s €5-a-share offer when it was made in March.
Talgo’s share price dropped on news of the Spanish government veto. On Thursday, the stock closed 8 per cent below its level immediately prior to the government’s decision.
Additional reporting by Andy Bounds and Alice Hancock in Brussels
