Magyar Vagon’s takeover bid for Talgo is cooling and analysts advise selling the Spanish company’s shares

The possibility that Magyar Vagon will acquire 100% of Talgo’s cool products, or at least that’s how the market understands it. The Spanish company lost more than 6% in Monday’s trading session, and analysts at Renta 4, Bankinter and GVC lowered their recommendations. Most of them recommend sell train manufacturer securities.

Talgo shares closed on Monday at 4.485 euros, down 6.17% from the 4.78 they reached on Thursday, shortly before the National Securities Market Commission (CNMV) decided to suspend the listing until rumors of a public takeover bid (takeover bid).

On Friday, after the market closes, Magyar Vagon confirmed to the regulator that it is conducting “talks and negotiations” about the possibility of purchasing 100% of Talgo at a price of 5 euros per share, for a total of about 617 million euros. However, the Hungarian consortium noted that agreement has not yet been reached a final decision on this issue has not yet been made.

These conversations, reported through the CNMV, “are being conducted in connection with Company financing subject to change of control in order to obtain appropriate consents.” That is, banks have a guarantee of automatic execution of Talgo’s debt in the event of the company changing hands.

According to the text sent to the CNMV, Magyar Vagon would ask that its proposal be conditioned on obtaining institutional approval. However, the institution headed by Rodrigo Buenaventura did not allow this to happen.

“There is no certainty”

However, Magyar Wagon admitted that “there is no certainty that a public offer for the acquisition of Talgo shares will be formulated,” since if the companies’ approval is not obtained, they may require the processing of loans. The likelihood that the takeover will ultimately fail. disappointed the market, which had been waiting for this operation for several months – since November.

But as Cesar Sanchez-Grande, an analyst at Renta 4, explained, Fine persons to change control over the company “It should be a simple procedure.”since “most bank loans include change of ownership provisions.”

(CNMV approves Apollo’s €1.226 million takeover bid for Applus)

Of course, this excludes that the Hungarian group will face a payout if the banks decide to early discharge Talgo’s debt. Simply put, “the takeover bid will not happen.”

Although Renta 4 analysts are confident that the operation will take place, They recommend selling Talgo shares “Given the risk that the takeover will ultimately not go through.” They share their opinions with Bankinter experts.

Government Permission

That same Friday, the organization led by Dolores Dancausa revised its recommendations on Talgo. It came from neutral To sell. “The current situation is that the formulation of the proposal is not confirmed, so the value should gradually lose growth” listed on the stock market, they explain.

On the other hand, they point out that “if the wording of the proposal were finally confirmed (…), it would be normal for Talgo shares to “remain below the proposed level.”

(The government plans to extend takeover protection until the end of 2024)

In addition, the operationgovernment approval may be required “Because this is a purchase in the transport infrastructure sector by a foreign group,” they add. “Something could be strategic, mainly due to the company’s patented variable gauge system,” they emphasize from Renta 4.

Government sources consulted by EL ESPAÑOL-Invertia declined to comment on the matter. ‘We don’t make estimates’ when closing operations, indicate sources in the Ministry of Economy. And if they are completed, then when “all the details about it” become known.

(The government is “reviewing in detail” BlackRock’s purchase of 20% Naturgy)

It should be remembered that the power grab defense will allow the government to veto the operation, provided that the conditions for doing so are met.

This legal regime also applies to foreign direct investment in listed enterprises made by companies based in the European is the case with the Hungarian Magyar Vagon.

Little potential

Sabadell analysts also changed their recommendation to sell in front of him the little extra potential that Talgo offers regarding the price of a possible takeover bid. In addition, they consider it unlikely that a counter takeover will occur.

The small potential that Talgo offers is also the reason why analysts at GVC Gaesco have lowered their recommendations. In this case, the downward revision is carried out with accumulate To neutralin case there is any competitive takeover bid, in case the first one is finally submitted

War of conquest?

Renta 4 experts also do not exclude a possible counter-offer. “although the options are becoming fewer and fewer”. Of all the possible contenders – from Siemens to Alstom/Bombardier, through Hitachi or even a financial investor – enterprise analysts give the highest probability to two companies: CAF and Stadler.

“CAF could be one of the potential companies due to the complementarity of the production and technical services divisions, the synergies (commercial, production, central services) as well as the increase in size and as a defensive move (to avoid the strengthening of a competitor in Spain),” they explain.

Despite this, they believe “that this variant has lost a lot of weight.” So they point to Stadler How “the primary candidate making a potential counteroffer” because the acquisition of Talgo “gives it significant size”, allows it to enter the ultra-high-speed transport segment, in which Stadler is not present, and “strengthens its presence in Spain”.

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