Ricardo divests Ricardo Defense

Further to the previous announcement, dated 21 October 2024, and consistent with the Group’s strategy, Ricardo is pleased to announce the conditional disposal of the Group's interests in the Ricardo Defense Business to Proteus Enterprises LLC and Gladstone Investment Corporation, via GPD Acquisition Inc. (the "Buyer") for US $85 million (£67.5 million*) (the "Disposal"), following an extensive and thorough process conducted by the Board.  

Highlights

• Sale of Ricardo Defense to Proteus and Gladstone, via GPD Acquisition Inc, for $85 million (£67.5 million) as adjusted post-Closing on a cash-free, debt-free basis 
• Highly complementary to the Group’s five-year strategy and supports the acceleration of Ricardo’s portfolio transition to a high growth, high margin and less capital-intensive business in the medium to long term. 
• The Group has separately announced the Acquisition of an 85% shareholding of E3 Advisory for AUD $101.4 million (£51.0 million^), with the remaining 15% expected to be acquired after 3 years. Details of the Acquisition are contained in the Acquisition announcement, which should be read in conjunction with this announcement. 
• Reflecting the current strong financial performance of Ricardo Defense, the Disposal is expected to be dilutive to the Group’s earnings per share in the near term, partly offset by earnings contribution from E3 Advisory.

Graham Ritchie, Chief Executive Officer of Ricardo, commented:

"The Disposal forms part of the Group’s stated strategy to optimise our portfolio, as it repositions itself for long-term and sustainable growth in environmental and energy transition solutions. Ricardo Defense has an established and successful history in delivering integrated vehicle engineering solutions for the US Army, and as a Group, we are privileged to have played a role in its success. We are confident, that under a different ownership, this business will continue to grow and prosper.

With the sale of Ricardo Defense and the announcement that we have entered into an agreement to acquire E3 Advisory, we are now a more focused business, leveraging our expertise to create further value in the medium to long term across our chosen markets."

Strategic rationale

Aligned to its strategy, Ricardo continues to position itself as an environmental, engineering, and strategic consultancy that offers expertise and solutions that support global sustainability agendas. Ricardo sits at the intersection of transport, energy, and environmental agendas, which is a key competitive differentiator in the consulting market.  The depth and breadth of engineering, scientific and economic expertise that the Group holds, from strategy to implementation, supports the complexity of energy transition.

Ricardo's strategic investments are focused on expanding and strengthening the 'Environmental and Energy Transition' portfolio. This approach allows Ricardo to strengthen its position for long-term sustainable growth where it can accelerate its portfolio transition and simplify its brand positioning as a leader in environmental and energy transition.

The Ricardo Defense Business currently sits within the Group's Established Mobility portfolio and provides capabilities in engineering and production services for land vehicles in the defense sector. Its solutions products have been the principal contributor to its recent strong financial performance, due to an extension contract award in September 2023.

The Board believes the current timing is optimal to maximise the value of Ricardo Defense through a sale, considering the successful ramp up of delivery of the ABS retrofit system, the finite time period for delivery of the ABS retrofit solution, and the improved visibility in the business of pilot programmes.

Having conducted an extensive competitive sale process, the Board considers it has achieved an appropriate valuation for the business and will deploy the sale proceeds in line with its capital allocation policy, with a focus on accelerating the portfolio transition of the Group and strengthening its 'Environmental and Energy Transition' portfolio.

Further information:

For detailed information please refer to the published RNS  

~ENDS~ 

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