European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

<ul>
<li>Government-Backed Takeover: The Spanish Government blocked Pesa’s €5 per share bid, clearing the way for Sidenor’s lower €4.8 per share offer, aligning with Basque industrial and political interests.</li>
<li>Political Motivations: The intervention is driven by the Spanish Government’s need for Basque nationalist party support in Congress, favoring a regional industrial consolidation over foreign investment.</li>
<li>Recommendation Downgrade: With the removal of competitive bidding, Talgo’s valuation should revert to sector multiples, leading to a SELL recommendation and an estimated fair value of €2.50 per share.</li>
</ul>


Government-Backed Takeover: The Spanish Government blocked Pesa’s €5 per share bid, clearing the way for Sidenor’s lower €4.8 per share offer, aligning with Basque industrial and political interests.
Political Motivations: The intervention is driven by the Spanish Government’s need for Basque nationalist party support in Congress, favoring a regional industrial consolidation over foreign investment.
Recommendation Downgrade: With the removal of competitive bidding, Talgo’s valuation should revert to sector multiples, leading to a SELL recommendation and an estimated fair value of €2.50 per share.


Pesa/Talgo: Talgo Takeover Blocked by Spanish Government

<ul>
<li>Sidenor’s non-binding offer: Raised to €4.8 per share for 29.8% of Talgo, with a fixed €4.15 and €0.65 contingent on financial targets in 2027 and 2028.</li>
<li>Competing interest from Pesa and Jupiter Wagons: Polish and Indian bidders are considering offers, while SEPI explores involvement to maintain Spanish control over Talgo.</li>
<li>Uncertainty persists: Regulatory approvals, financial conditions, and competing bids complicate Talgo’s ownership future, with binding offers due by February 14, 2025.</li>
</ul>


Sidenor’s non-binding offer: Raised to €4.8 per share for 29.8% of Talgo, with a fixed €4.15 and €0.65 contingent on financial targets in 2027 and 2028.
Competing interest from Pesa and Jupiter Wagons: Polish and Indian bidders are considering offers, while SEPI explores involvement to maintain Spanish control over Talgo.
Uncertainty persists: Regulatory approvals, financial conditions, and competing bids complicate Talgo’s ownership future, with binding offers due by February 14, 2025.


Talgo Acquisition: Sidenor’s Bid and Competitive Landscape

<ul>
<li>Government intervention is a key factor in Talgo’s auction, with Spain favoring local ownership and previously blocking a Hungarian bid, leading to legal challenges and a drop in share price.</li>
<li>Talgo’s unique variable gauge technology allows trains to switch between European and Iberian track widths, reducing transit times and maintenance costs, making it a competitive and highly adaptable asset.</li>
<li>Shares look fairly valued and downside looks limited. Consensus TP is 3.6% above the last closing share price, while upside in case of €5/offer is 28%.</li>
</ul>


Government intervention is a key factor in Talgo’s auction, with Spain favoring local ownership and previously blocking a Hungarian bid, leading to legal challenges and a drop in share price.
Talgo’s unique variable gauge technology allows trains to switch between European and Iberian track widths, reducing transit times and maintenance costs, making it a competitive and highly adaptable asset.
Shares look fairly valued and downside looks limited. Consensus TP is 3.6% above the last closing share price, while upside in case of €5/offer is 28%.


Talgo Takeover: A Speculative Opportunity

<ul>
<li>According to daily Expansion, Ganz MaVag plans to reserve part of <a href="https://www.smartkarma.com/entities/talgo-sa" target="_blank" data-smartkarma-citation="entities:21301:1" rel="noopener">Talgo SA (TLGO SM)</a>'s share capital for one or more Spanish partners chosen by the Spanish Government. </li>
<li>Uncertainty over the approval process has lowered the price to €4.31, given the low likelihood of counteroffers and the uncertainty of a potentially prolonged process.</li>
<li>Gross spread is 13.8%, indicating uncertainty regarding timeline and development. The market is pricing a 39% probability of deal completion. Recommendation is sell on strength.</li>
</ul>


According to daily Expansion, Ganz MaVag plans to reserve part of Talgo SA (TLGO SM)'s share capital for one or more Spanish partners chosen by the Spanish Government. 
Uncertainty over the approval process has lowered the price to €4.31, given the low likelihood of counteroffers and the uncertainty of a potentially prolonged process.
Gross spread is 13.8%, indicating uncertainty regarding timeline and development. The market is pricing a 39% probability of deal completion. Recommendation is sell on strength.


Ganz MaVag Offers Sweetener to Spanish Government

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>Reportedly buyout firms are "vying for" <a href="https://www.smartkarma.com/entities/trend-micro-inc" target="_blank" data-smartkarma-citation="entities:13172:1" rel="noopener">Trend Micro Inc (4704 JP)</a>. The stock went limit up today. Again. The stock is now getting to the expensive side.</li>
<li>
<a href="https://www.smartkarma.com/entities/furukawa-co-ltd" target="_blank" data-smartkarma-citation="entities:19521:1" rel="noopener">Furukawa (5715 JP)</a> has changed their capital allocation policy for the third time. The company is a cyclical, and will likely always suffer the indignity of a cyclical multiple.</li>
<li>While it often pays to follows where the family invests when assessing holdco structures, <a href="https://www.smartkarma.com/entities/melco-international-development-ltd" target="_blank" data-smartkarma-citation="entities:809:1" rel="noopener">Melco International (200 HK)</a>'s NAV discount is simply too narrow for a simple holding company structure.</li>
</ul>


Reportedly buyout firms are "vying for" Trend Micro Inc (4704 JP). The stock went limit up today. Again. The stock is now getting to the expensive side.

Furukawa (5715 JP) has changed their capital allocation policy for the third time. The company is a cyclical, and will likely always suffer the indignity of a cyclical multiple.
While it often pays to follows where the family invests when assessing holdco structures, Melco International (200 HK)'s NAV discount is simply too narrow for a simple holding company structure.


Last Week in Event SPACE: Trend Micro, Furukawa, Melco, Ingenia/Lifestyle

Spain

Talgo S.A. is a Spain-based specialized rolling stock engineering company focused on the designing, manufacturing and servicing of lightweight trains.

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Talgo SA (TLGO SM)

Pesa/Talgo: Talgo Takeover Blocked by Spanish Government

Spanish government blocks Pesa's bid, favors Sidenor for political reasons, leading to a recommendation downgrade for Talgo.

Jesus Rodriguez Aguilar

Talgo Acquisition: Sidenor’s Bid and Competitive Landscape

Sidenor raises offer for 29.8% of Talgo, but faces competition from Pesa and Jupiter Wagons. Uncertainty looms over ownership future with...

Jesus Rodriguez Aguilar

Talgo Takeover: A Speculative Opportunity

Government favors local ownership of Talgo, with Spain having blocked a Hungarian bid. Top shareholders wish to exit. Talgo's unique technology...

Jesus Rodriguez Aguilar

Ganz MaVag Offers Sweetener to Spanish Government

According to daily Expansion, Ganz MaVag plans to reserve part of Talgo SA (TLGO SM)'s share capital for one or more Spanish partners chosen by the...

Jesus Rodriguez Aguilar

Last Week in Event SPACE: Trend Micro, Furukawa, Melco, Ingenia/Lifestyle

It’s Sunday! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed during the...

David Blennerhassett

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52-week Range

Market Cap (USDm)

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Pesa/Talgo: Talgo Takeover Blocked by Spanish Government

​Spanish government blocks Pesa's bid, favors Sidenor for political reasons, leading to a recommendation downgrade for Talgo.

Jesus Rodriguez Aguilar

Talgo Acquisition: Sidenor’s Bid and Competitive Landscape

​Sidenor raises offer for 29.8% of Talgo, but faces competition from Pesa and Jupiter Wagons. Uncertainty looms over ownership future with...

Jesus Rodriguez Aguilar

Talgo Takeover: A Speculative Opportunity

​Government favors local ownership of Talgo, with Spain having blocked a Hungarian bid. Top shareholders wish to exit. Talgo's unique technology...

Jesus Rodriguez Aguilar

Ganz MaVag Offers Sweetener to Spanish Government

According to daily Expansion, Ganz MaVag plans to reserve part of Talgo SA (TLGO SM)'s share capital for one or more Spanish partners chosen by the...

Jesus Rodriguez Aguilar

Last Week in Event SPACE: Trend Micro, Furukawa, Melco, Ingenia/Lifestyle

It’s Sunday! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed during the...

David Blennerhassett

Spanish government blocks Pesa's bid, favors Sidenor for political reasons, leading to a recommendation downgrade for Talgo.

Sidenor raises offer for 29.8% of Talgo, but faces competition from Pesa and Jupiter Wagons. Uncertainty looms over ownership future with...

Government favors local ownership of Talgo, with Spain having blocked a Hungarian bid. Top shareholders wish to exit. Talgo's unique technology...