Daniel Loeb’s Third Point suffered a blow in its first major foray into southern Europe after Spanish defence firm Indra abandoned plans to merge with weapons manufacturer EM&E, according to a report by the Financial Times.
Loeb’s hedge fund had taken a stake in Indra in February, backing a deal that aimed to combine Indra’s tech capabilities with EM&E’s heavy weapons manufacturing, allowing Indra to expand production amid rising EU defence spending linked to the Ukraine conflict and US defence requirements. Sources said Third Point viewed the merger as “critical” to Indra’s growth and urged the board to finalise the transaction swiftly.
The merger was ultimately halted due to conflict of interest concerns involving the brothers Ángel Escribano and Javier Escribano. Both brothers are founders and sole owners of EM&E and also hold significant stakes and board positions at Indra, raising regulatory and shareholder concerns. Spain’s state holding company, Sepi, which owns 28% of Indra, insisted conflicts be resolved before any merger could proceed.
Following Sepi’s intervention, EM&E formally notified Indra that conditions were not met for the deal, leading Indra to end its consideration of the transaction. Shares of Indra fell 12.3% on the news, reducing its market value to €8.8bn.
