Link between Hungary and Putin worries banks over Talgo takeover

In a message to the market a few days ago, the Hungarian consortium Ganz-MaVag Europe confirmed its desire to buy Talgo. At the same time, he clarified that negotiations “are ongoing regarding the financing of the company subject to a change of control, in order to obtain the appropriate approvals”; This means that a Hungarian company must obtain bank approval before it can carry out a transaction.

Creditors Talgo They are investigating the origin of Magyar funds, El Confidencial reports. This is not so much about analyzing the feasibility of the purchase or the Hungarian company’s plans for the Spanish railway company, but about concealing possible connections that will ultimately unite the bank with Russia. Among the Spanish organizations that make up the “pool” of Talgo creditor banks are: Santander, BBVA and Caixabank; and others, although to a lesser extent, such as Sabadell Bank.

The bank traces the business and political connections of Magyar and his managers, as well as where the funds available to the Hungarian company come from. Financial institutions, when such changes in control occur, carefully review aspects, knowing that they must agree. But in this case the need to be careful is even greater.

“Hungary is Hungary,” say financial sources. This phrase shows the caution with which banks act, since the risk that creditors would be exposed to if the money was linked to Russia would be enormous. This risk could take the form of possible fines from the European Union for the sanctions they are subject to. Russia, its leaders and oligarchs, among others, but this will also lead to reputational damage. Thus, in the financial sphere, the connections of Magyar and his directors with Orbanthe only European leader associated with Putin and the Chinese in the shoes of the EU.

If the Hungarian takeover bid is not approved, a variety of scenarios will open up that could derail the operation and even end with the early repayment of Talgo’s banks, putting Talgo in a delicate situation for the railway company. In any case, the financial sector understands that in order to refuse entry of the Magyars there must be clear ties with Russia, and they are analyzing this.

In addition, the financial sector is also waiting for government intervention. Banks believe the executive will have a say in the takeover bid thanks to rules protecting strategic Spanish companies, although everything will depend on whether Talgo is considered strategic or not. La Moncloa’s vision would also serve as a starting point for the entities.

In principle, everything indicates that the operation will go this way and will have to pass through the anti-takeover filter, since it involves the acquisition by a foreign group of a Spanish listed company. Meanwhile, Budapest is trying to convince the Spanish government that the operation is beneficial to both countries. Yesterday, Hungarian Foreign Minister Péter Szijjarto noted that Magyar Vagon’s entry into the Basque manufacturer would “strengthen economic relations between Spain and Hungary.” He said a few words after a meeting in Madrid with his Spanish counterpart José Manuel Albarez.

It is recovering in the stock market

While the bank digs deeper into the matter, Talgo’s market price managed to bounce back yesterday (+1.78%) after Monday’s stock market fiasco, which saw its shares fall 6%. The company remains silent regarding the operation. But if the Hungarian takeover fails, the train maker will be looking for another buyer in the market. There have been rumors in recent months that a direct competitor such as CAF could be an alternative candidate. But at the moment such a possibility is excluded.

If the Ganz-MaVag consortium’s takeover bid is successful, Talgo will receive approximately $617 million for the entire company.

Currently, the main shareholder of Talgo is the manager of Trilantic, owning 40% of the shares. An American investment fund controls this stake through Pegaso Transportation International and has been looking for a buyer for the railway manufacturer for some time. In the social capital he accompanies Ana Patricia Torrente Blasco with 5% shares as stated in the reports CNMV.