Sidenor takes control of Talgo after improving the offer

MADRIDTalgo remains in Basque hands. After months of back-and-forth, the English fund Trilantic has closed an agreement with the steel company Sidenor for the purchase of 29.7% of the train manufacturer's share capital, as reported by the company through the National Securities Market Commission (CNMV) this Friday afternoon. The outcome has come after Sidenor has once again improved its offer, raising it to 184 million euros. In addition, it is an offer that has the financial support of the Basque government, as well as the BBK and Vital foundations, shareholders of the Kutxabank bank. This Friday afternoon, the lehendakari Imanol Pradales was "optimistic" about the outcome of the negotiation: "[The agreement] will contribute to consolidating Talgo's roots in Euskadi, to reinforcing industrial employment and strengthening the future of the company," said Pradales.

Trilantic, the shareholder leading the Pegaso consortium (40% of Talgo's share capital), had set this Friday, February 14, as the deadline to receive offers for its participation in the Spanish train manufacturer. In the last few hours, the Basque steel company's option had gained weight as a solution to the shareholder problem, especially considering that the possibility of a foreign takeover bid, such as that of the Polish fund PFR, had cooled. It should be noted that the Sidenor option is the one that most pleased the government of Pedro Sánchez, who considers Talgo a "strategic" company, which is why he has promoted maintaining the Spanishness of the shareholding.

The latest offer from the Basque company Sidenor is valued at around 184 million euros, which represents a price per share of 5 euros. However, it is structured in two tranches. A first tranche associated with a fixed price of 4.15 euros per share (153 million euros) and a second variable tranche of 0.85 euros per share, which means offering an additional 31 million euros. This second tranche is the one that Sidenor has improved at the last minute, since it had initially put on the table an additional offer of 0.65 euros per share (24 million euros).

With the improvement, the Basque steel company reaches the price that the Hungarian company Magyar Vagon put on the table when it launched the takeover bid for 100% of its share capital. A route that was dead in August of last year due to the veto of the Spanish government. However, Sidenor has linked this second tranche to "compliance with certain financial magnitudes" by Talgo during the years 2027 and 2028. That is, based on its accounts.

Amid the uncertainty of recent days, Talgo has seen its stock market value constantly rise and fall. This Friday afternoon the Spanish train manufacturer fell more than 2% and the share closed the day at 3.80 euros. Far from the 4.31 euros of just two days ago. And not only that. The shareholder journey has ended with the departure of one of the company's most emblematic figures: non-executive vice president José María Oriol, a member of the founding family of Talgo. The man who was CEO between 2005 and 2020 has left the post for "personal reasons".

Takeover bid war

Stock market volatility has been marked by constant rumours of a possible foreign takeover bid for Talgo. In fact, the Spanish train manufacturer closed the year having to look for a plan B after the company was forced to close its doors. Magyar Vagon's takeover bid derailed by the veto of the Spanish government. Pedro Sánchez's executive linked it to the "protection of Spain's strategic interests and national security."

The truth is that the Talgo-Hungary duo had never pleased Pedro Sánchez's government, which sought to avoid it from the beginning. The suspicion arose from the good rapport between the Hungarian president, Viktor Orbán, and Vladimir Putin, even in the midst of the war in Ukraine. But they also do not like the fact that Orbán is spreading his tentacles in the rest of the member states of the European Uniondue to the authoritarian drift that his ultra-conservative regime has taken.

Then there were a possible takeover bid by the Polish state fund PFR and an offer from the Indian company Jupiter. Although in the first case the intention to launch the operation through the CNMV was even confirmed, the pressure from the Spanish government to maintain Spanishness has ended up giving wings to the Basque route.