Indra’s board of directors met this Wednesday and unanimously agreed that the possible merger with Escribano Mechanical & Engineering (EM&E) is “consistent” with the company’s strategy, as reported by the National Market Commission. … of Securities (CNMV).
“The board of directors (…), without the assistance of the directors affected by a conflict of interest (with reference to the president of Indra, Ángel Escribano, and his brother and president of EM&E, Javier Escribano), in light of the reports of the management team, the ‘ad hoc’ commission and the independent advisors engaged in this regard regarding the strategic adequacy of a possible operation between Indra Group and Escribano Mechanical and Engineering, agreed to unanimously that said possible operation is coherent with Indra’s strategy”, indicates the document published by the CNMV.
The report was prepared based on the analysis carried out by Indra’s management team and after taking into account the contributions and conclusions of the company’s external advisors and the ad hoc committee (Renaissance Strategic Advisors and Oliver Wyman).
“This agreement does not imply or anticipate approval of any transaction. Nor does it condition any type of formula that could be adopted nor any of its economic terms, which have not yet been evaluated by the board of directors. At the end of this agreement, the company and its respective teams and corporate bodies They will continue with the analysis of the rest of the aspects relevant to the potential transaction,” the statement added.
In this context, it should be remembered that Indra’s board of directors created a commission made up of independent members at the beginning of last July to supervise “compliance with the applicable rules for the proper management of conflicts of interest” in the face of the possible merger with EM&E.
The decision to create this commission was adopted “before analyzing any operation that could involve a conflict of interest and with the aim of guaranteeing good corporate governance”.
It should be remembered that the president of Indra since January 19, Ángel Escribano, is co-owner of EM&E with his brother and president of EM&E, Javier Escribano.
Similarly, EM&E owns 14.3% of Indra and is the company’s second largest shareholder, just behind the government, which owns 28% of the capital through the State Company of Industrial Participations (SEPI).
In addition, Javier Escribano is part of the Indra board of directors on behalf of EM&E.
In this way, the possible operation is led by the CEO of Indra, José Vicente de los Mozos, given that Angel Escribano and Javier Escribano are absent from all conversations of the Indra board of directors regarding this operation.
The possible merger with EM&E would mean for Indra to incorporate into its scope an arms company, an activity in which the company has already expressed its interest and for which it has created a new division, called Weapons & Ammunition.
In this sense, EM&E develops, among other products, turrets for tanks and armored vehicles, a market in which the company also participates alongside Indra, Sapa Placencia and Santa Bárbara Sistemas (owned by General Dynamics) through Tess Defense, today a subsidiary of Indra and which won the manufacture for the Spanish army of the 8×8 Dragon and the Chain Support Vehicle (VAC), two contracts worth around 2 billion euros each.
Indeed, at the beginning of last May, De los Mozos recognized that the possibility of a merger with EM&E would mean “added value” for the company in its project to become the leading company in the defense sector in Spain.
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