US hedge fund Third Point has taken a stake in Spanish defence and technology group Indra and is backing plans by the company’s chairman to acquire smaller rival Escribano Mechanical & Engineering, according to a report by Bloomberg.

The report cites an unnamed source familiar with the matter as highlighting that he investment was disclosed in a letter sent to Indra’s board and state holding company SEPI, which controls a 28% stake in the business. The size of Third Point’s holding was not disclosed.

The proposed acquisition of Escribano Mechanical & Engineering — owned by Indra chairman Ángel Escribano and his brother Javier — has raised concerns among some shareholders over potential conflicts of interest.

In the letter, Third Point chief executive Dan Loeb said he strongly supported the transaction, describing it as a strategic opportunity to build a Spanish defence champion.

Indra and SEPI reportedly declined to comment on the investment.