unless the Spanish government finds a better buyer, the Hungarians can win

Although it is clear from the recent statements of the Spanish Transport Minister Óscar Puente and the Minister of Finance María Jesús Montero that they are still looking for an alternative to the 619 million euro Hungarian takeover offer for the Talgo train manufacturer, it seems that they have not succeeded in lining up any industry investors, wrote Cinco in Madrid on Monday Slides business page.

The Spanish government is delaying the Talgo case, even though Ganz-Mavag would really be the solution / Photo: Shutterstock

The Spanish government remains committed to Talgo

During the attempts to thwart Ganz-Mavag’s acquisition plan, only one financial investor, the Spanish CriteriaCaixa, could be persuaded to give a conditional yes, but they would only venture into the transaction on the side of a sector professional.

So, while, as Montero admitted, they are looking one by one for very important and listed Spanish companies, the Foreign Investments Council investigating the case is working on a report that would allow the government to make a decision within 3 months. The goal is to protect the sector, which is considered strategic, and to replace the shareholders leaving Talgó with investors acceptable to the Moncloa palace, i.e. the government.

However, it is extremely difficult to find an actor with experience in the railway sector who also undertakes to lead the consortium

one of the high-ranking government officials admitted to the newspaper.

The Spanish CAF, known here for its trams, and the Swiss Stadler, also known in domestic circles, have reportedly already refused the government’s request – the latter citing its factory in Valencia – and the French Alstom and the German Siemens were even less interested in the deal. It is a fact that the Trilantic capital fund and the 40 percent share package of Pegaso Holding, owned by the Abelló and Oriol families, were already for sale before the epidemic, so if anyone was interested in Talgo, they could have applied long ago.

But why does the Western European competition not need Talgo?

At first glance, it is not really understandable why Talgo’s largest shareholder sold parsley until Ganz-Mavag Europe’s offer came into effect, since the Spanish’s new orders are constantly increasing, and last year they reached a new high of 2.1 billion euros, while the order backlog of the complete order was 35 percent, It jumped to over 4.2 billion. The company, which cashed in 652 million euros in revenue in 2023, managed an EBITDA margin of 11.5 percent, which far exceeded the 7.5 percent margin achieved by big brother CAF with a turnover of 3.8 billion euros. Talgo was even able to generate a modest net profit of 12 million euros in its last closed business year.

In addition, the backlog of orders is likely to prove permanent, as Talgo’s state-of-the-art technology is considered a reference in the European market for the decarbonization of passenger and freight transport, while the company’s competitive trains are also gaining ground in the MENA countries (Middle East and North Africa). after.

The Talgo 250, for example, is an AC/DC train equipped with variable-gauge axles, allowing it to run on either high-speed or conventional broad-gauge lines. The state-of-the-art Talgo Avril trains, which can also be used on variable gauge, are already designed for a speed of 380 kilometers per hour.

Talgo’s production capacity is limited, and this is where the Hungarians come into play

At the same time, the surging demand also entails risk for the company, since

the order backlog is less and less able to be fulfilled with the company’s production capacity, and this is precisely what drew the attention of the Hungarian company, which is currently struggling with underutilized capacities

Cinco Dias writes. It is typical of the situation that the Spanish state railway, Renfe, imposed a fine of more than 166 million euros on the manufacturer looking for an investor, after the delivery of the first Talgo Avril trains was delayed by almost two years.

At the same time, the Spanish cabinet still believes in the attractiveness of Talgo’s factories in Madrid and Alava, where a total of 3,300 people are employed. The leaders of Stadler and Alstrom have said several times that neither in Spanish industry nor in technical planning are there enough skilled workers available.

Of course, the question is whether Madrid’s hope is not in vain, since even if the buyer were to gain access to a new labor base, they would also have a much larger order backlog, and therefore would still be standing where the coast is torn apart.