Transformation into Indirect Speech
The statement "He said to me, 'Who can defeat me?'" can be transformed into indirect speech as follows:

Reporting the Statement
He asked me who could defeat him.

Explanation
In indirect speech, the statement is reported by the speaker rather than directly quoting the words of the original speaker. The reporting verb "asked" is used to indicate that a question was posed. The pronouns also change to reflect the perspective of the reporting speaker.

Benefits of Using Indirect Speech
1. Clarity: Indirect speech helps to clarify the speaker's intentions and allows for smoother integration of quotes into the text.
2. Formality: Using indirect speech can make the language more formal and appropriate for academic or professional writing.
3. Accuracy: Indirect speech ensures that the original meaning of the statement is preserved while fitting it into the context of the reporting speaker's words.

Conclusion
Transforming direct speech into indirect speech is a valuable skill for writers and speakers. It allows for effective communication of others' words while maintaining clarity and accuracy in reporting.