Spanish rolling stock manufacturer Talgo received a letter of interest from a Hungarian business group the other day for a stake in the company at a price of five euros per share. The stake purchased appears to be a majority one, which could bring the Hungarian investors to majority shareholder status. The Hungarians have set their sights on Talgo.
The news made the Spanish rail group one of the day’s main protagonists on the Spanish stock exchange. After a first hour of trading in which its listing was suspended by the regulator, Talgo’s shares continued to make very significant advances, although always below the EUR 5 of the eventual offer. After peaking at EUR 4.64 (an 18.6% increase on Wednesday’s close), its share price lost momentum as the hours passed and closed at EUR 4.38, up 11.88% on the previous day.
Hungarians set their sights on Talgo
If it materializes, the Hungarian group’s offer would amount to about EUR 632 million and would imply a premium of 27.5%, taking into account the EUR 3.92 at which the rail manufacturer’s shares closed last Wednesday, up 2.7% in the session.
Talgo added that, as far as is publicly known, there is no decision from the investor on the possible takeover bid or certainty that it will continue to consider the operation. Trilantic and Abelló, Talgo’s major shareholders, would welcome the deal after they commissioned Citi almost a year ago to look for investors to take over their 40% stake in the company.
According to La Información newspaper, a Hungarian-born industrial group has begun talks with Talgo’s board of directors and presented a first option to buy.
The withdrawal plans of the Trilantic investment fund, which controls more than 40% of Talgo, are older. According to official CNMV data, it controls 40.03% of the company’s capital through Pegaso Transportation International.
In addition, Talgo shareholders include Ana Patricia Torrente Blasco, who owns 57.4% of the investment company Torrblas, which owns 5.03% of the rail group. The rest of the capital is distributed in minority stakes.
Rolling stock company Talgo earned EUR 470.3 million in the first nine months of the year, up 33.5% on the previous year, thanks to increased production and contract extensions in Germany and Denmark, figures that improve its full-year forecast for 2023.
Also contributing to the increase in revenues were locomotive production and the train refurbishment project for Renfe, as well as recurring and stable revenues from maintenance activity.
The group, which increased its adjusted EBITDA by 68% in the period under review, posted a record order book of EUR 4.2 billion, boosted by new orders worth more than EUR 1.9 billion.
Talgo, founded in 1942, is present in Spain, Germany, Kazakhstan, Uzbekistan, Saudi Arabia, Egypt and the United States, among other countries. It is Renfe’s main supplier of high and very high speed trains and the train supplier for the high speed rail project linking Mecca and Medina in Saudi Arabia. It is also the manufacturer of choice for German operator Deutsche Bahn and Danish operator DSB for decarbonising mobility with long-distance trains.