Bankinter | The Hungarian consortium Ganz-MaVag is willing to reserve part of Talgo’s capital to a Spanish partner designated by the Government.
With this proposal Ganz-MaVag hopes to overcome the Government’s reluctance to approve its takeover bid for Talgo.
Between 9 and 10 August, the government must decide on the takeover bid, although the deadline may be extended by three months as more information has been requested.
Analysis: This solution is similar to the one that paved the way for the US fund Bain Capital to buy the aeronautical engine and components manufacturer ITP two years ago. Bain reserved part of the capital for a consortium of Spanish companies, including Indra, which took a 9.5% stake in ITP, and the Instituto Vasco de Finanzas with 6%. We recall that the Hungarian consortium offered €5/share in cash for 100% of the capital. The share was trading at €4.8/share at the beginning of February, but the uncertainty about the approval process of the takeover bid (officially communicated to the CNMV at the beginning of March) has taken it to levels of €4.24/share at the close of trading on Friday. Given the low probability of a counter takeover bid and the uncertainty of a process that may continue to drag on, we would take advantage of rallies towards our Target Price to Sell.
