investment risks amid rumors of takeovers

Talgo: investment risks amid rumors of takeovers |

Betting on companies that are in the zone of a possible takeover bid is a strategy widely followed by investors, given the high potential for interesting profits when an offer is made at a price higher than the price of the purchased share.

But this doesn’t always happen, and it’s the main risk an investor faces in being caught in a value trap if a takeover bid doesn’t go through.

And the stock market is not free from hoaxes that fuel a company in the stock market from time to time. We’ve seen this repeatedly.

In other cases, when everything seems to be done, when everything points to the formalization of the proposal, it can also fall through.

There is always a risk. We’ve just seen this with Talgo, whose shares soared on the stock market for the second time in less than three months due to interest from the Hungarian group, which now says it is not confident a takeover bid will be formulated.

Its shares, returning to trading after the suspension of the CNMV, fell, to the chagrin of investors who entered them in hopes of a strong revaluation.

Warmth from Telefonica

There are other picturesque situations in the Spanish market. For example, what is happening at Telefónica, which also became very tense when the government said it was going to buy 10 percent of the operator through Sepi.

But two months have passed and the government does not know how or when it will carry out the operation. The shares are already trading below the price they marked at the time of this news.

It is unlikely that the CNMV will be able to demand rigor and seriousness from companies in dealing with these transactions when the government, which should lead by example, already sees how it acts.

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