MADRID - Shares in Spanish engineering and defence company Indra slumped 16% on Friday. a day after shareholders agreed to a board reshuffle that gives the government greater control as Spain looks to boost defence spending.
Indra, in which the public state holding company SEPI holds a 25.2% stake, said on Thursday in a statement that it had removed five of its eight independent board members.
"This company is now in the hands of the Spanish government and the voice of minority shareholders will no longer be defended at board level," Kepler Cheuvreux said in a note to clients.
Changes at the board level were supported by stakeholders such as Basque company SAPA and international activist fund Amber Capital, led by French investor Joseph Oughourlian, the broker said.
Amber Capital had asked that four independent members be removed, Indra said in a media release, while a fifth independent board member was not renewed.
SAPA has a 5% stake in Indra while Amber Capital holds 7.4%, according to data from the Spanish supervisor CNMV.
At 0817 GMT, shares in Indra were down 15.2% at 8.590 euros having lost as much as 16.4%.
Among the changes, the company announced on Thursday the appointment of Borja Garcia-Alarcón as it new CFO, following recent changes at management level such as new chairman Marc Murtra and a new head of IT.
"In our view, the risk on governance may persist for some time, for instance press has highlighted the possibility of acquiring minority stakes, although so far the company has denied an interest," UBS said.
In February, SEPI received authorisation to increase its stake in the company to up to 28%.
UBS said that despite the risks, the company's backlog had been growing strongly, with an order intake in the first quarter up 43% year on year.
After Russia's invasion of Ukraine, Spain has promised to increase its defence spending to 2% of GDP as required by NATO in the coming years.
