The brothers Ángel and Javier Escribano have decided to sell their 14.3% stake in Indra through an accelerated placement, thereby leaving the company’s capital and, with it, their representation on the board of directors. This ends a power dispute within the company and opens new scenarios, including those related to the buyers of the stake and the currently unconsidered possibility by Indra of resuming the merger with EM&E.
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“Today, EM&E has transferred its entire stake in Indra Sistemas, as a result of which Advanced Engineering and Manufacturing no longer holds any stake in Indra,” the sellers explained to the CNMV.
Indra has also informed the regulator that Javier Escribano has communicated by letter his decision to resign “firmly and irrevocably” as a proprietary director “after said shareholder transferred its entire shareholding.” The family company EM&E had the right to two directors but only requested one because Javier joined the board through the position of chairman, from which he resigned about a month ago. With this resignation, he also left the board of directors.
Sources at Indra indicate that the idea of resuming the merger project with EM&E, which the market values at close to 2 billion euros, “is not on the table.” This issue has not been discussed in any of the company’s recent board meetings, which had shelved the operation by the Escribano’s own decision.
The sale of the stake, Indra says, took the company “by surprise.” It is a decision the Escribano brothers made without prior consultation with the company.
Had a merger with EM&E been finalized when the Escribano brothers held 14%, their stake would have rivaled that of SEPI, a circumstance that once caused concern in the Government. It was one of the reasons Moncloa decided to distance itself from the Escribano family.
However, the Escribano’s withdrawal from the capital would now facilitate an acquisition of EM&E that would allow Indra to advance its growth plans. The two companies were awarded the recent Defense artillery contract worth more than 7 billion euros, while Indra has secured an order book valued at 20 billion euros.
The accelerated placement of the Escribano stake took place in a session in which Indra’s shares rose 4.8%, to 52.35 euros per share. The company is now valued at 9.246 billion euros.
With the exit from the capital of the technology and defense group, the Escribano brothers end an investment started in 2023, with an initial acquisition of 3% of the company that they increased with financial support from JPMorgan to reach the current 14.3%, valued at just over 1.3 billion euros.
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The support from the American bank allowed the Escribano brothers to undertake an investment of nearly 400 million euros which now, thanks to the strong revaluation of the company fueled by new military programs, will generate capital gains of around 900 million euros. This will be more than enough to repay the loan and comfortably facilitate any new corporate moves around EM&E.
Ángel Escribano became chairman of the company early last year, replacing Marc Murtra, who took the same position at Telefónica. From that position, Escribano accelerated Indra’s acquisition plan and pushed a controversial merger with his family company EM&E, which the board saw as strategically fitting but faced rejection from SEPI, which requested the conflict of interest be resolved.
Departure from the chairmanship after clash with SEPI
The crisis caused a clash on Indra’s board in which SEPI, the company’s main shareholder with 28%, aligned with SAPA, owner of nearly 8%, against the Escribano brothers and the Amber fund, which holds just over 5% and is owned by Joseph Oughourlian. The division reached the board of directors itself and ended with Escribano’s resignation as chairman.
After the confrontation, Indra appointed Ángel Simón, former CEO of Criteria, as the new chairman to start a new phase and calm tensions. Jesús Vicente de los Mozos remains as CEO, determined to carry out the new strategic plan.
Indra continues with its project to consolidate itself as a major national defense champion, for which it needs to acquire capabilities in the sector. The chosen path is acquisitions, for which possible acquisitions have been evaluated, although none significant have occurred so far.
When asked at the group’s recent earnings presentation about the operation with EM&E, De los Mozos said Indra had “nothing to decide” regarding this matter, since it was the Escribano brothers who decided to withdraw from the operation. The “only” thing to do was to wait, he said.
“When two companies are negotiating and one withdraws, the only thing I can do is wait and the day they make a decision, we will study it,” the executive said. “If today they have considered it is not the right time, I have nothing to decide and I respect their decision,” he added.
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