- Canadian firm pays 28% premium
- Deal marks another mid-cap exit
- Science Group books big profit
Shareholders in engineering and consulting group Ricardo (RCDO) will be toasting the company this morning after it announced an agreed £280 million takeover by Canadian professional services firm WSP Global (WSP:TSE).
Ricardo shares climbed 83p or 25% to 418p, just shy of the 430p cash offer from WSP.
BETTER TOGETHER
According to WSP, the acquisition, priced at a 28% premium to Ricardo’s closing share price on 10 June, will ‘accelerate the implementation of Ricardo’s strategic objectives and provide additional opportunities for cost savings and revenue synergies through increased scale and complementary offerings’.
The deal also supports WSP’s 2025 to 2027 strategic plan by ‘accelerating its expansion in targeted high growth areas and enhancing its capabilities in Rail and Mass Transportation (Rail) and Environmental and Energy (EE)’.
Ricardo’s rail business has global expertise supporting leading OEMs and is known as a leading name specialising in high value rail engineering and assurance services, while its environmental and energy business is highly specialised and differentiated from the typical environmental consultancies, with niche areas of high-value expertise including policy, strategy and economics; air quality, nature and water management; and corporate sustainability and energy market modelling.
In the meantime, Ricardo’s Automotive & Industrial (A&I) and Performance Products (PP) businesses will be combined to form a single, simplified unit leveraging design engineering capabilities with the ability to take design into production.
Under WSP, Ricardo will continue its ongoing strategic review of the businesses with the view to selling them off at a later date.
NICE LITTLE EARNER
As a footnote to the takeover, Science Group (SAG) – which had amassed a considerable stake in Ricardo in order to put pressure on the board, of which it was highly critical – revealed it had cashed out of its investment.
The firm announced that, ‘to facilitate the WSP Offer’, it had agreed to sell 12.44 million Ricardo shares – equivalent to roughly 20% of the issued share capital – to WSP at the 430p offer price.
Based on its average entry price of 239p per share, Science Group therefore netted a pre-tax net return after fees and costs of 70% in less than four months.
The cash proceeds of the sale, which are around £53.5 million, will be retained ‘for future strategic investments and corporate opportunities’.
The news sent shares in Science Group 39p or 8.5% higher to 504p.
