Indra's shares ended Thursday's stock market session with a drop of more than 7%, after it became known that the company is in talks with Santa Bárbara Sistemas, controlled by the European subsidiary of General Dynamics, to form a joint venture to bid for land military equipment contracts.
In detail, the shares of the Spanish technology company fell by 7.26%, to 47.39 euros per share, making it the worst-performing stock in the entire Madrid index during the session.
The market's reaction came after the press reported that both companies, which had previously been in conflict over the award of artillery programs to the temporary joint venture (UTE) formed by Indra and Escribano Mechanical & Engineering (EM&E), were negotiating the creation of a 'joint venture' or common enterprise to join forces and compete for land defense contracts.
A Shift in the Relationship Between Indra and Santa Bárbara
The possible agreement would represent an unprecedented rapprochement between the two companies, as just a week ago Santa Bárbara decided to file an appeal with the National High Court (AN) against the award of said artillery programs, for a total amount exceeding 7,000 million euros.
It is worth remembering that Santa Bárbara exhausted the legal deadline to appeal until the last day and argued that it was a "procedural appeal." At the same time, the company admitted that, in parallel, contacts were being maintained with Indra with the aim of "uniting the sector, generating synergies, and leveraging all existing industrial and technological capabilities in Spain."
"Santa Bárbara is confident in the outcome of the ongoing efforts," they stated at the time, referring to both the legal process and the conversations with the multinational chaired by Ángel Simón. In this regard, the possible creation of a joint venture would be interpreted as the culmination of this dialogue and the rapprochement between the two multinationals.
In this scenario, Banco Sabadell analysts maintain their overweight recommendation for Indra's shares. "Pending knowledge of the final structure of the potential alliance and the division of responsibilities, this would be positive news as it would strengthen Indra's capabilities in the land defense segment and give it the opportunity to increase its future order backlog," they indicated.
Lastly, experts have pointed out that, "despite not having had much impact on the quotation, this potential agreement could put an end to the legal dispute opened by Santa Bárbara".