photo: Kabelleger / David Gubler / CC BY-SA 4.0 / Wikimedia Commons/High-speed train in Spain
The sale of Spanish train manufacturer Talgo is nearing its conclusion, with steel giant Sidenor entering the race. Despite governmental support, alternatives are being sought due to their higher offers.
According to various sources, the sale of Talgo is expected to conclude by the end of this month. Among the latest contenders is Sidenor, a prominent steel corporation with a significant advantage: its strong local Basque ties and patriotic appeal.
The largest shareholder of Talgo, the investment fund Trilantic, which holds 29.9% of the company’s shares, recently met with Spain’s Minister of Transport, Óscar Puente, and representatives of Sidenor. Spanish newspaper Cinco Días reports that the Spanish government strongly prefers that Talgo remains under national ownership, favoring Sidenor. The Basque regional government, led by its Finance and Economy Minister, Noel D’Anjou, has also actively pushed for Sidenor’s bid.
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Sidenor’s bid is set to be backed by public funds through the Sociedad Estatal de Participaciones Industriales (SEPI) and the Basque fund Finkatuz. However, despite this support, Talgo shareholders consider Sidenor’s offer of EUR 4 per share too low. For comparison, previous negotiations with Hungarian investor Ganz Mavag—which were ultimately terminated by the Spanish government due to concerns over potential Russian ties—offered EUR 6 per share, valuing Talgo at EUR 500 million.
Balancing Price with Viability
Talgo's ownership is actively seeking a better price, aiming for at least the value reached during earlier negotiations, despite the company’s current share price of EUR 3.6 per share. The company’s valuation is also weighed down by potential penalties for missed deadlines.
For example, Spanish rail operator Renfe is demanding EUR 166 million in compensation for a two-year delay in the delivery of Avril trains, lost revenue, and technical issues. Similarly, Talgo faces potential penalties from Deutsche Bahn, where it won a tender for ICE-L trains over competitors Siemens and Alstom, but delivery delays are raising concerns.
Competition from Poland and India
This situation opens the door for other bidders, including Poland and India. The Polish state rail company PESA Bydgoszcz, represented by its owner, the Polish Development Fund (PFR), is reportedly preparing a higher bid than Sidenor. Meanwhile, Indian company Jupiter Wagons is exploring multiple options, one of which involves a joint bid with Sidenor.
PESA holds a strategic advantage due to a memorandum of understanding with Talgo for the joint development and production of high-speed trains, signed at last year’s InnoTrans trade fair. These trains are intended for Poland’s future CPK high-speed rail network. However, according to Spanish media, the bid from Czech manufacturer Škoda Transportation is no longer in contention.
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Source: El País; capitalmadrid.com