Indignant residents of the Mallorcan town of Sóller have said their railway is not for sale after a group of investors launched a hostile takeover bid.

The town has been linked to the capital, Palma, with a picturesque narrow-gauge railway since 1912. The train, with its wooden carriages, has been in continuous use ever since, climbing 200 metres and passing through 13 tunnels on its 27km journey.

Money for building the line was raised among the town’s residents, and to this day most of the 172,000 shares in the private company Ferrocarril de Sóller are owned by about 800 local people, many of whom hold as few as 10 shares each.

Sóller’s mayor, Carles Simarro, said: “It would be a shame if the railway lost its unusual status of being owned by hundreds of local citizens.” The railway was part of the “essence of Sóller”, he said. The bid has come from a group of 10 to 15 anonymous investors, most of them Spanish, represented by Goros Investments. They are reportedly offering €25m for control of the railway, and the takeover bid, if accepted, would pay the equivalent of 15 years’ worth of dividends.

But Jaume Servera, who was mayor of Sóller until June, said local people were deeply attached to the train and he doubted many would sell. Between them, small investors hold up to 20% of the stock.

“It’s not a question of whether the offer is good but whether people want to sell,” Servera said. “For sentimental reasons, I don’t think the majority of small shareholders will want to. It’s something very entrenched in the life of Sóller.”

The railway’s steam engines, manufactured in Barcelona, were replaced by electric locomotives in 1929. It now carries about a million passengers a year, most of them tourists. The bidders say they want to improve disabled access, increase traffic, introduce credit card payments and online reservations and offer cheap off-season travel to Mallorcan residents. They also propose new cultural excursions to attract more passengers and claim that the board needs to be shaken up.

Shareholders have until 6 September to decide if they wish to accept the offer. Currently the two largest shareholders are a local tour operator and restaurateur and a company that runs boat trips around the north-east of the island.