Ricardo plc Acquires Transport Engineering Pty Ltd
Ricardo plc ("Ricardo"), a global engineering, technical, strategic and environmental consultancy business, today announces that it has signed a share purchase agreement, with Stephen and Alia Boyd, to acquire the entire share capital of Transport Engineering Pty Ltd ("Transport Engineering" or the "Company"), one of Australia's largest rail systems technical engineering firms, for a total maximum cash consideration of AUD$53.6 million (£28.9 million), subject to any adjustments for cash and normalised net working capital and certain financial performance targets (the "Acquisition").
This Acquisition provides an active presence for Ricardo in Australia, a strategically important, sizeable and growing market. Transport Engineering will be renamed Ricardo Rail Australia and will form a core part of the Group's Rail segment adding breadth and depth to Ricardo's existing strong rail capabilities.
Transport Engineering is a privately-owned Company and Director Stephen Boyd will remain and continue to lead the business together with the Company's employees.
Dave Shemmans, Chief Executive Officer of Ricardo plc commented:
"I am delighted to be able to announce the signing of the share purchase agreement with Transport Engineering and look forward to welcoming Stephen Boyd and his team into the global Ricardo family. I am excited about the breadth and depth of experience that Transport Engineering will bring to Ricardo and the opportunities that this will bring for Ricardo in Australia. Transport Engineering has an excellent market reputation, strong customer relationships and a very similar culture of quality and excellence in engineering to that of Ricardo."
"This acquisition is in line with our strategy of diversification both geographically and market sector, further increasing the proportion of our business in the Rail sector. In light of the well documented current challenges in the Automotive market where we have seen supressed performance this year, our strategy and market diverse portfolio of businesses is particularly relevant."
Information on the Acquisition terms
Ricardo will acquire the whole of the issued share capital of Transport Engineering Pty Ltd and its 45% subsidiary Wamarragu Transport Services Pty Ltd.
The maximum consideration is AUD$53.6 million (£28.9 million), all payable in cash, subject to adjustment to reflect normalised levels of working capital at the date of completion. At completion, the vendors will receive AUD$38.6 million (£20.9 million), with AUD$7.8 million (£4.2 million) and AUD$7.2 million (£3.8 million) on the back of the Company's 2020 and 2021 30 June year end audited financial statements, subject to the financial performance in the respective periods.
In the year ended 30 June 2018, the Company recorded revenues of AUD$21.5 million (£11.6 million) and adjusted standalone profit before tax of AUD$4.7m (£2.5 million) and gross assets of AUD$7.1 million (£3.8 million).
The consideration will be funded from the Group's existing £150m Committed Revolving Credit Facility. It is expected that the Acquisition will be immediately enhancing to underlying earnings. Ricardo's ownership of the business is expected to be effective on or before the 30th June 2019.
Information on Transport Engineering and rationale for the transaction
Transport Engineering is a highly regarded Australian rail systems engineering technical adviser. Since it started trading, the Company has delivered an impressive track record of growth. It offers advisory, design and delivery services on projects in both the public and private sector and employs a staff of c.100 engineers and specialists, in locations across Australia and Asia.
Transport Engineering has a strong technical advisory capability in the full life cycle management of rolling stock and maintenance procurement programs on behalf of its clients, as well as the provision of on-site inspectors and auditors in suppliers' premises, safety engineering, RAM / maintenance engineering, project management, human factors, testing and commissioning and systems integration.
Ricardo growth strategy in rail is underpinned by global challenges related to urbanisation, the increasing global interest in urban and high-speed networks, and the integration of critical and complex rail technologies as government respond to accelerating levels of urbanisation. This Acquisition is central to the delivery of growth in transportation, one of the Group's strategic pillars alongside Energy and Scarce Resources and Waste.