Hungary Tightens Control on Strategic Company Deals

Hungary expands state pre-emption rights over strategic company deals – including ongoing transactions. In a discreet but impactful regulatory shift, the Hungarian government has significantly expanded its pre-emption rights over transactions involving strategic domestic companies. The move was formalized in Government Decree 163/2025 (VI. 23.), published in the official gazette on June 23rd, amending the emergency-era Decree 561/2022 (XII. 23.) on the protection of strategically important Hungarian firms.

Previously limited mainly to solar energy investments, the Hungarian state’s right of first refusal can now be exercised across a broad range of sectors, whenever a transaction is prohibited on national interest grounds. Importantly, the new rules apply to transactions already in progress as well.

Under the revised framework, the review period for foreign acquisitions in strategic sectors has been extended from 30 to up to 135 working days, allowing for a base term of 45 days, with up to three extensions totalling an additional 90 days.

A More Assertive Role for the State

The key novelty is that in the event of a governmental veto, the state may now step in the deal and acquire the asset under the same terms originally agreed by the buyer and seller. This right had previously been confined to the electricity sector, and only for one month following the blocked transaction. The revised regulation introduces a broader and more proactive role for the state in safeguarding national economic interests.

According to the government’s rationale, the decree seeks to prevent foreign control over entities of “critical national economic importance”. Transactions are reviewed by the Minister responsible for economic development, often in consultation with other ministries, who may approve or block the deal, or opt for state pre-emption.

Broad Scope of Covered Sectors

The regulation covers deals in a sweeping range of industries, including but not limited to:

• Energy: Electricity, gas, steam supply, nuclear fuel production.
• Telecom & Media: Broadcasting, telecommunications, publishing.
• Critical Infrastructure & Manufacturing: Electronics, defence, machinery, vehicle production.
• Finance: Banking, insurance, pension funds.
• Food & Agriculture: Food processing, tobacco, farming, forestry, aquaculture.
• Health & Education: Healthcare services, social care, higher education.
• Construction & Utilities: Building, water supply, sewage, waste management.
• Transport & Logistics: All modes of transport, warehousing, postal services.
• Real Estate: Land and property connected to agricultural use.
• Tourism & Hospitality: Accommodation and food services.
• IT Services: Data processing, hosting.
• Raw Materials: Extraction of coal, oil, gas, and metal ores.
• Administrative Services: Temporary employment and HR-related activities.

The pre-emptive right only applies if the value of the deal exceeds HUF 350 million (approx. EUR 900,000).

Legal Tensions with EU Law

The timing and scope of this expansion are especially notable given a recent ruling by the Court of Justice of the European Union (CJEU). In the Xella vs. Hungary case, the CJEU found that Hungary’s original veto mechanism may violate EU law, particularly the freedom of establishment, when based on vague national interest criteria.

That case involved Hungary blocking a domestic acquisition on the basis that the buyer belonged to an EU group with a third country (Bermuda-based) shareholder. The court ruled that such generic grounds—like “public interest” or “raw material supply security”—were insufficient and not compliant with EU law, unless based on specific, serious security risks.

Despite this, the Hungarian government has not scaled back its approach. Instead, it has extended the very mechanism that triggered legal concern, now granting the state a purchase right where a deal is vetoed—without refining the criteria or narrowing the scope.

What This Means for Investors

For foreign investors, especially those exploring mergers, acquisitions, or equity transactions in Hungary’s strategic sectors, regulatory uncertainty has increased. Due diligence must now consider state intervention risk not only at the approval stage but also as a potential buyer, should a deal be denied.

This latest move underscores a broader trend toward economic nationalism and regulatory assertiveness in Hungary’s foreign investment policy—potentially setting the stage for further clashes with EU legal standards. Given the significance of this regulatory development in the M&A landscape, it is strongly recommended to consult with a professional advisor before proceeding with any transaction.