Science Group PLC on Tuesday said it has crossed a ‘key’ threshold in its holding in Ricardo PLC, renewing its call for governance change at the engineering consultancy as it sharpened criticism of the current board.
The Cambridge, England-based Science Group and engineering investor said it now holds a 20.08% stake in Ricardo, up from 19.09% previously, describing the threshold as ‘a key strategic investment milestone’.
The holding was acquired over seven weeks at an average price of 236 pence per share. Science Group said this price level had not been seen since 2010 and reflected investor loss of confidence in Ricardo, as well as ‘disappointing’ recent operating performance.
Ricardo shares were 6.5% higher at 245.00p in London on Tuesday afternoon but remain down 46% in the last 12-month period.
The increased stake intensifies a simmering row between the two companies. Since first disclosing an 8.5% holding in February, Science Group has repeatedly criticised Ricardo’s financial performance, questioned its governance, and demanded the replacement of Chair Mark Clare.
Last month, Ricardo rejected the demand to remove Clare, calling it ‘contrary to the interests of Ricardo’s other shareholders’. It argued that the move would allow Science Group to gain de facto control without offering a premium to shareholders.
Science Group dismissed that claim as ‘absurd’, pointing out that Ricardo already has a director nominated by another major shareholder.
On Tuesday, Science Group reiterated its view that Ricardo is ‘unable to manage the company through the market headwinds of 2024’.
‘In light of recent market and economic volatility, increasing significantly in the past week, the need to effect change at Ricardo is even more pressing,’ the company said.
It said a new strategy should be defined by a ‘realigned board’ and accused Ricardo of ineffective governance.
Science Group added that it still has significant financial flexibility, with £21.2 million in cash and an undrawn £30 million credit facility, plus a £10 million accordion option.
Shares in Science Group were up 1.0% at 411.00 pence in London on Tuesday afternoon.
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