Indra's €1.5 Billion Acquisition of Escribano Mechanical & Engineering

Indra’s acquisition of Escribano Mechanical & Engineering: Romulus and Remus, a conflict of interest? 

The proposed merger between Indra, Spain’s state-backed defence and technology giant valued at €7 billion, and EM&E, a fast-growing weapons systems manufacturer, is presented by its architects as a practical consolidation. Indra specialises in high-end radar technologies but lacks the industrial “muscle” and production facilities needed to compete with major European defence groups or secure significant contracts—particularly in Ukraine, where it has struggled for two years to gain traction. EM&E, by contrast, brings cutting-edge ground-force technology—tank weapon systems, high-calibre gun barrels, optical targeting systems—and a well-positioned manufacturing hub outside Madrid. On paper, the merger would produce a national champion capable of rivalling Italy’s Leonardo, Germany’s Rheinmetall, or France’s Thales. But beneath this industrial logic lie three layers of conflict-of-interest and antitrust concerns that have ignited debate in Spain. 

Brother-to-Brother Concerns

The most immediate red flag arises from the unusual personal overlap between the two companies. EM&E is co-owned by brothers Javier and Ángel Escribano, each holding a 50% stake. Javier is chair of EM&E, while Ángel, remarkably, is chair of Indra. Both brothers also sit on Indra’s board. Thus, a merger would not simply join two companies—it would effectively consolidate assets controlled by the same family inside a state-backed corporation. The Escribano family would be the largest beneficiaries of the deal and would have an extensive influence over both companies.

The unease felt about this merger has become apparent through the resignation of two Indra directors.  To avert some of the criticism surrounding the deal, Indra and EM&E have set up an ad hoc committee of four independent directors to manage the deal. Both brothers have excluded themselves from the deal. Javier has also claimed that he would be paid in Indra shares. To allay some of the criticisms of the deal, it may help to remember that Indra was rumoured to have considered a deal with EM&E under Marc Murtra, the chair prior to Angel Escribano. Mutra moved to Telefonica in January. This indicates that the deal could have occured irrespective of the ties of brotherhood.  

Company-Level Concerns

At the corporate level, EM&E already owns 14.3% of Indra, making it the company’s second-largest shareholder after the state owned SEPI. It is worth noting that this stake grew recently, increasing by 6%, in December 2024. The deal was announced in July 2025.  This sizeable position granted EM&E privileged access to strategic information and meaningful voting power long before any merger talks formally began. Such influence can distort negotiations, disadvantage minority shareholders, and raise concerns under Spanish competition law, which prohibits mergers or agreements that distort market dynamics, restrict output, or unfairly increase dominance. The technology group, SAPA, Indra’s third-largest shareholder (7.94%), has already publicly opposed the deal on these grounds, and several independent directors have expressed similar reservations.

With EM&E valued at €1–1.5 billion and projecting an explosive sales growth to €1.3 billion by 2030, any share-based acquisition must be scrutinized for whether it disproportionately enriches insiders or consolidates too much market power in a single defence group. This work is being done for Indra by Goldman Sachs, with the ad hoc group hiring Morgan Stanley. EM&E is working with Santander and JP Morgan. Escribano defended himself, saying “there could be a conflict of interest if we were playing both sides. But think about this: we are not the ones who are going to put a price on the organisation, because top-tier global banks are going to do that”3.  

National-Level Concerns

The Spanish state, through SEPI, owns 28% of Indra and has been open about its ambition to elevate Spain into Europe’s defence “big league.” Yet state involvement introduces another layer of antitrust risk. Consolidating Indra and EM&E into one vertically integrated defence champion could limit competition within the national market, potentially violating Article 1 and Article 2 of Spain’s Competition Act, which prohibit the restriction of competition and the abuse of dominant positions. Moreover, since EM&E is already the largest private shareholder in Indra, critics worry that a state-sanctioned merger could entrench a semi-public monopoly in several strategic segments—radar, weapons systems, and military electronics—undermining both market fairness and Spain’s credibility in European procurement frameworks.  

A law professor at IE Madrid has stated that “From a competition law perspective, the possible merger raises significant questions about market access and fair competition,” but it would be unfair to overly prohibit mergers of defence companies in a part of Europe where there are very few and there is very little national funding. Historically, EM&E has received most of its contracts in the Middle East and in America since Spain has had such a meagre amount of money allocated to its defence budget. It seems unsurprising that given Spain’s new desire to invest in defence, companies are joining together to meet that demand.

To conclude, while the merger promises industrial strength and improved competitiveness, it also presents intertwined challenges: family-level conflicts, corporate-level antitrust risks, and national-level concerns. Until these issues are legally resolved, the proposal will remain one of the most controversial in Spain’s modern defence industry.