Analysts question the potential of Skoda Transportation’s (different from the car maker) planned bid for Talgo. Reports from Banco Santander, CaixaBank, JC Capital, and Renta 4, reviewed by ACTIVOS, the economics vertical of Prensa Ibérica, rate the move as difficult and unlikely to surpass the five euros per share offered by Magyar Vagon for total control.
Skoda Transportation sent a letter to Talgo’s Board of Directors last Tuesday proposing a “business combination and industrial integration” without detailing a price, a requirement that the domestic trainmaker has insisted upon. The request centers on whether this would exceed Magyar Vagon’s proposal and whether payment would be in cash. The maneuver comes as the Hungarian consortium launched an offer on March 7 and awaits government approval, though it does not yet enjoy official backing.
In CaixaBank’s view, it would be hard for Skoda to launch a full public offer at a price equal to or higher than Magyar Vagon on a standalone basis, given that it would value Talgo at over 600 million euros, nearly 13 times the EV/EBITDA ratio. The bank, however, leaves open the possibility that a strategic or financial partner could join the deal, which would bring the SEPI into the equation.
Banco Santander argues that a successful fusion and industrial combination would need cash compensation to shareholders, as seen in past cases such as the Alstom-Bombardier deal and Siemens Energy-Gamesa. The bank suggests Skoda would propose a relative valuation between Talgo and Skoda, enabling Talgo to raise capital and issue shares to Skoda. Talgo shareholders would need to vote in favor of the merger, and the question arises whether they would accept a cashless premium, especially given the ongoing five-euro-per-share takeover bid.
Renta 4 expresses doubts about Skoda’s ability to offer a higher cash alternative than Magyar Vagon, noting that the Czech firm is a relatively small player in rolling stock. It also highlights Trilantic’s apparent preference to clinch an agreement with Magyar rather than with Skoda, especially since the latter has yet to present a counteroffer. The Talgo prospectus acknowledges that the Hungarian consortium would be entitled to more than three million euros in compensation if another investor launches a competing bid.
JB Capital, founded by Javier Botín, argues that a counteroffer above five euros would be positive, but believes Skoda is unlikely to pursue it. The firm thinks Trilantic would only accept a 100% counteroffer since a full takeover is already on the table and appealing. The analysis notes Trilantic’s current stance and the strategic importance of controlling the entire Talgo shareholding to complete its investment cycle.
Trilantic’s preferred route remains Magyar Vagon, a negotiation that has run for nearly two years since December 16, 2022. The cash payment without stock exchange is favored because it allows the fund to finish its investment cycle. Most involved parties agree that Talgo’s primary impediment is industrial rather than purely ownership-based, suggesting that the industrial plan will determine the ultimate outcome more than the number of shares owned.
Trilantic’s stance on a 100% counteroffer persists
Pegasus, Talgo’s main shareholder, a consortium led by Trilantic, Juan Abelló, and the Oriol family (founders of Talgo), would accept a full 100% counteroffer from Talgo. They have indicated they would not negotiate a sale of their stake in isolation, ruling out options that would allow the Government to permit a partial sale to Skoda while Trilantic sells only a portion of its stake to a financial partner. This would open the door to a broader, more competitive process but risks reducing Talgo’s strategic autonomy.
In any case, Trilantic’s favored option remains Magyar Vagon. The deal has been under discussion for almost two years because it offers immediate cash, without any stock swaps, letting the fund complete its exit. Most market participants agree that Talgo’s challenge is not purely financial but industrial; the priority is to define a credible plan for Talgo’s future alongside any potential buyer. Beyond naming one or several contenders capable of bidding around 600 million euros, the key is to understand the industrial strategy each party would implement.
[Sources: CaixaBank, Banco Santander, Renta 4, JB Capital, and market readers following the Talgo bid developments. Citations attributed to the respective financial institutions and press analyses.]