Spain vetoed Hungarian bid for train group ‘over Ukraine concerns’

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Spain blocked the Hungarian takeover of a Madrid-based trainmaker on the grounds that Viktor Orbán’s Russia-friendly government should not acquire technology that could be useful to Ukraine, according to people familiar with the matter.

A senior Spanish government official said Madrid vetoed the €619mn bid for Talgo in part because the company could aid Ukraine’s reconstruction by helping it strengthen its rail links with the EU.

“One of Ukraine’s biggest interests is the rail connection,” the official told the Financial Times, stressing that Talgo could help Ukraine overcome one big impediment: the fact its rail tracks are a different width.

Spain has classified the documents explaining its decision — which it made on “public security and order” grounds — and declined to comment on whether its concerns are linked to Orbán and his relations with Russia, which have been the closest of any western leader since Moscow’s full-scale invasion of Ukraine.

Spain’s Prime Minister Pedro Sánchez has criticised Orbán as the “pro-Putin” leader of the “international far right” and said the Hungarian prime minister “wants to bring Ukraine to its knees”.

Ganz-Mávag, the consortium that launched the Talgo bid in March, is backed by an investment arm of the Hungarian state and trainmaker Magyar-Vagon, which Spain has asserted is “ultimately controlled” by Hungarian oil company MOL.

The Spanish official said Talgo had advanced engineering — known as automatic gauge change technology — that would enable trains to move seamlessly between Ukrainian train tracks and narrower rails in neighbouring European countries.

“That point of collaboration with Ukraine is one of the most important parts of the process of reconstructing the country and integrating it into Europe,” the official said.

Ukraine’s train tracks are 1,520mm wide in line with Soviet norms, but the standard for European rails is 1,435mm, a size that originated in the UK.

Variable gauge technology was developed in Spain because the country, unusually, uses multiple track widths: the most common is a 1,668mm Iberian gauge, but there is a 1,000mm narrow gauge in the north while Spain’s high-speed trains run on standard European tracks.

According to Talgo, which produces passenger trains, its variable gauge system “enables a train to adapt its wheel gauge while running at approximately 15km/h and without having to stop”.

Due to Ukraine’s wider tracks, most passengers on trains to and from Warsaw have to endure waits of several hours while the train axles are adjusted manually. Such delays also affect wagons carrying Ukrainian exports of grain and other goods, whose weight exacerbates the problem of incompatible gauges.

Talgo pioneered the gauge change technology and is still considered a leader in the field, even though most of its key patents have expired and other trainmakers now have similar engineering.

Ganz-Mávag has already said “there are no well-founded reasons” for Spain’s veto and vowed to launch legal action against the government.

In comments to the FT, a spokesperson for the consortium disputed the idea that its interest in Talgo was driven by the variable gauge system and stressed that the technology was “not exclusive” to Talgo.

“Our interest in Talgo has always focused on increasing the production capacity of this leading company in supplying high-speed passenger trains. Gauge change technology is simply not a factor to be taken into consideration and anyone knowledgeable of the train sector would know this to be an excuse to hide behind a political decision.”

MOL, one of eastern Europe’s largest companies with a significant state ownership and which has continued to process Russian crude despite the war, did not immediately respond to a request for comment.

A lawyer familiar with Talgo said the gauge change technology “did not make sense” as a reason for Spain to veto the bid. “There is either something they are not telling us, or they just don’t want to sell to a government they are criticising every day.”

A Hungarian government spokesperson did not immediately respond to a request for comment.

György Bacsa, chief operating officer of oil group MOL’s Hungarian operations and chairman of the Ganz-Mavag Europe board, said MOL exercised no control over the train company.

Additional reporting by Carmen Muela in Madrid