European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

<ul>
<li>Indra's potential merger with Escribano aims to strengthen its industrial base for future European defense programs, but governance concerns and shareholder dilution risks are creating significant market uncertainty.</li>
<li>The transaction’s structure is critical: a pure share swap would preserve Indra’s balance sheet health, while a heavy cash component could raise leverage dangerously, approaching 3.4x net debt/EBITDA.</li>
<li>Event-Driven investors should de-risk ahead of the April 30 board meeting, monitor deal terms closely, and prepare to pivot based on the merger’s financing structure, governance safeguards, and strategic fit.</li>
</ul>


Indra's potential merger with Escribano aims to strengthen its industrial base for future European defense programs, but governance concerns and shareholder dilution risks are creating significant market uncertainty.
The transaction’s structure is critical: a pure share swap would preserve Indra’s balance sheet health, while a heavy cash component could raise leverage dangerously, approaching 3.4x net debt/EBITDA.
Event-Driven investors should de-risk ahead of the April 30 board meeting, monitor deal terms closely, and prepare to pivot based on the merger’s financing structure, governance safeguards, and strategic fit.


Building the Arsenal: Indra’s Possible Merger with EM&E

<ul>
<li>Indra is shifting to a pure-play defence and space company, divesting from IT services (Minsait) to achieve higher valuation multiples in line with aerospace and defence peers.</li>
<li>Hispasat and Hisdesat acquisition will generate €400 million in revenue and €190 million EBITDA by 2026, with synergies reaching €50-70 million EBITDA by 2030.</li>
<li>Indra’s valuation could rise 40-60% by 2026, as defence and space grow to 65% of revenue, increasing EV/EBITDA multiples from ~7x to 10-12x.</li>
</ul>


Indra is shifting to a pure-play defence and space company, divesting from IT services (Minsait) to achieve higher valuation multiples in line with aerospace and defence peers.
Hispasat and Hisdesat acquisition will generate €400 million in revenue and €190 million EBITDA by 2026, with synergies reaching €50-70 million EBITDA by 2030.
Indra’s valuation could rise 40-60% by 2026, as defence and space grow to 65% of revenue, increasing EV/EBITDA multiples from ~7x to 10-12x.


Indra’s Transformation into a Pure-Play Defence and Space Company

External reports (aggregated public sources), Value Investors Club

Value Investors Club

External reports (aggregated public sources)

Equity Bottom-Up

<ul><li>Indra Sistemas S.A. is positioned for success with increasing defense spending in Europe and growth in digital transformation services</li><li>Strategic focus on higher-margin Defense business and potential margin improvements in legacy IT segment expected to lead to significant margin expansion</li><li>Strong revenue growth, expanding profitability, robust order intake, and market leadership making Indra an attractive investment opportunity at an undemanding valuation.</li></ul>This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

Indra Sistemas S.A. is positioned for success with increasing defense spending in Europe and growth in digital transformation servicesStrategic focus on higher-margin Defense business and potential margin improvements in legacy IT segment expected to lead to significant margin expansionStrong revenue growth, expanding profitability, robust order intake, and market leadership making Indra an attractive investment opportunity at an undemanding valuation.This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

Indra Sistemas Sa (ISMAY) - Friday, Aug 9, 2024

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>You could label <a href="https://www.smartkarma.com/entities/kyocera-corp" target="_blank" data-smartkarma-citation="entities:753:1" rel="noopener">Kyocera Corp (6971 JP)</a>"BULLISH" because the stock goes up rather than down; but you could easily label this BEARISH because the prospects aren't exciting.</li>
<li>
<a href="https://www.smartkarma.com/entities/wh-group-ltd" target="_blank" data-smartkarma-citation="entities:13200:1" rel="noopener">WH Group (288 HK)</a>spins off <a href="https://www.smartkarma.com/entities/smithfield-foods-inc" target="_blank" data-smartkarma-citation="entities:44251:1" rel="noopener">Smithfield Foods (SFD US)</a> - below the prior expected price range.  Pricing looks full here.</li>
<li>As <a href="https://www.smartkarma.com/entities/china-national-building-ma-h" target="_blank" data-smartkarma-citation="entities:184:1" rel="noopener">China National Building Material (3323 HK)</a>'s Partial Offer heads towards the pointy end, do you buy, and/or borrow, and tender; short outright; or short tender?</li>
</ul>


You could label Kyocera Corp (6971 JP)"BULLISH" because the stock goes up rather than down; but you could easily label this BEARISH because the prospects aren't exciting.

WH Group (288 HK)spins off Smithfield Foods (SFD US) - below the prior expected price range.  Pricing looks full here.
As China National Building Material (3323 HK)'s Partial Offer heads towards the pointy end, do you buy, and/or borrow, and tender; short outright; or short tender?


Last Week in Event SPACE: Kyocera, WH Group/Smithfield, CNBM, Japan Eyewear, Core Concept Tech

<ul>
<li>According to daily Expansion, Ganz MaVag plans to reserve part of <a href="https://www.smartkarma.com/entities/talgo-sa" target="_blank" data-smartkarma-citation="entities:21301:1" rel="noopener">Talgo SA (TLGO SM)</a>'s share capital for one or more Spanish partners chosen by the Spanish Government. </li>
<li>Uncertainty over the approval process has lowered the price to €4.31, given the low likelihood of counteroffers and the uncertainty of a potentially prolonged process.</li>
<li>Gross spread is 13.8%, indicating uncertainty regarding timeline and development. The market is pricing a 39% probability of deal completion. Recommendation is sell on strength.</li>
</ul>


According to daily Expansion, Ganz MaVag plans to reserve part of Talgo SA (TLGO SM)'s share capital for one or more Spanish partners chosen by the Spanish Government. 
Uncertainty over the approval process has lowered the price to €4.31, given the low likelihood of counteroffers and the uncertainty of a potentially prolonged process.
Gross spread is 13.8%, indicating uncertainty regarding timeline and development. The market is pricing a 39% probability of deal completion. Recommendation is sell on strength.


Ganz MaVag Offers Sweetener to Spanish Government

Spain

Indra Sistemas, S.A. offers information technology products and services.  The Company offers systems integration and outsourcing services, installs railway management and ticketing systems, installs road traffic toll and signaling systems, constructs satellite communications systems, manufactures radar air defense systems, and installs insurance management systems.

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Indra Sistemas Sa (IDR SM)

Building the Arsenal: Indra’s Possible Merger with EM&E

Indra eyes Escribano to boost defense capabilities, but governance risks and potential dilution loom. Investors must watch April 30 for deal terms...

Jesus Rodriguez Aguilar

Indra’s Transformation into a Pure-Play Defence and Space Company

Indra is focusing on defence and space, divesting from IT services to increase valuation multiples and potentially see a 40-60% rise in valuation...

Jesus Rodriguez Aguilar

Indra Sistemas Sa (ISMAY) - Friday, Aug 9, 2024

Indra Sistemas S.A. is positioned for success with increasing defense spending in Europe and growth in digital transformation services

Value Investors Club

Last Week in Event SPACE: Kyocera, WH Group/Smithfield, CNBM, Japan Eyewear, Core Concept Tech

It’s Sunday! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed during the...

David Blennerhassett

Ganz MaVag Offers Sweetener to Spanish Government

According to daily Expansion, Ganz MaVag plans to reserve part of Talgo SA (TLGO SM)'s share capital for one or more Spanish partners chosen by the...

Jesus Rodriguez Aguilar

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Building the Arsenal: Indra’s Possible Merger with EM&E

Indra eyes Escribano to boost defense capabilities, but governance risks and potential dilution loom. Investors must watch April 30 for deal terms...

Jesus Rodriguez Aguilar

Indra’s Transformation into a Pure-Play Defence and Space Company

​Indra is focusing on defence and space, divesting from IT services to increase valuation multiples and potentially see a 40-60% rise in valuation...

Jesus Rodriguez Aguilar

Indra Sistemas Sa (ISMAY) - Friday, Aug 9, 2024

Indra Sistemas S.A. is positioned for success with increasing defense spending in Europe and growth in digital transformation services

Value Investors Club

Last Week in Event SPACE: Kyocera, WH Group/Smithfield, CNBM, Japan Eyewear, Core Concept Tech

It’s Sunday! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed during the...

David Blennerhassett

Ganz MaVag Offers Sweetener to Spanish Government

According to daily Expansion, Ganz MaVag plans to reserve part of Talgo SA (TLGO SM)'s share capital for one or more Spanish partners chosen by the...

Jesus Rodriguez Aguilar

Indra is focusing on defence and space, divesting from IT services to increase valuation multiples and potentially see a 40-60% rise in valuation...