Indra's stock price plummets due to the battle between the State and Escribano

BarcelonaIndra's shares began the day with a significant drop after SEPI, the Spanish government's investment arm, acknowledged last night a conflict of interest in the state-owned company's potential acquisition of Escribano Mechanical & Engineering SL (EM&M). This company is owned by the family of Indra's chairman, Ángel Escribano. Indra's shares plummeted by more than 6% by midday and continued their downward trend.

This decline follows SEPI's statement to the National Securities Market Commission (CNMV), which holds 28% of the capital and is the largest shareholder. SEPI stated that it "has conveyed to Indra its concern about the influence this conflict of interest has on the analysis of this transaction, despite the..." In fact, SEPI maintains that any conflict of interest between Indra and EM&M should be resolved before the acquisition takes place. For this reason, SEPI indicates, it has requested that "this conflict of interest be resolved in order to continue with the analysis of the operation and make a decision that is as advantageous as possible for Indra." With this communication, the Spanish government is implicitly pressuring Ángel Escribano to step down as president of Indra. Last Tuesday, rumors circulated about Escribano's possible resignation. They caused the company's stock market value to plummet.Escribano, who along with his brother, Javier, who is also an advisor to Indra, owns 14 percent of the capital of the company destined to build a large defense group, reiterated that he has no intention of leaving his post.

A few weeks ago, Indra published a protocol with the CNMV (Spanish National Securities Market Commission) regarding the possibility of proceeding with this operation. The protocol stipulated that Ángel Escribano would abstain from making any decisions and would recuse himself from the process, and that the potential acquisition would be led by the CEO, José Vicente de los Mozos. However, this initiative has not calmed the State's concerns, which is redoubling its pressure for Escribano to step down as chairman, a position he helped secure in January of last year when his predecessor, Marc Murtra, became chairman of Telefónica. Indra's largest shareholder is Spain, with 28% of the capital, and the second largest is the Escribano brothers, with 14.3%. The Escribanos, in turn, own EM&E. The conflict of interest argued by SEPI (State Holding Company for Industrial Participations) would arise because, if the integration operation were to go ahead, Indra would be acquiring a company co-owned by its own chairman.