Ricardo divests software business unit

Ricardo, a global strategic, environmental and engineering consultancy company, recently announced that it has completed the sale of Ricardo’s Software business unit comprising of shares in the UK, US and Czechia companies of Ricardo Software together with related assets to FOG Software Group, a division of Constellation Software Inc (CSI). 

The disposal forms part of Ricardo’s sharpened strategy to optimise its portfolio as it repositions itself for long-term and sustainable growth in environmental and energy-transition solutions. The proceeds will be reinvested into opportunities that offer attractive growth, whilst allowing the Ricardo Software business to grow under different ownership.

Ricardo Software is a technology partner to the world’s leading transport OEMs and Tier 1 suppliers, providing a full suite of automotive simulation design tools for propulsion and transmission design solutions. It is within this context, Ricardo considers that FOG Software Group is ideally placed for the Ricardo Software’s next stage of growth, given its STEM portfolio of businesses, which include CFD, visualisation and analysis software companies, and its ethos on building and growing market-leading software businesses. As part of the transaction, Ricardo will continue to have access to software licenses from FOG Software Group, ensuring continuity of service to its Automotive and Industrial customers.

The maximum cash consideration receivable is $20.5 million (Rs 162 crore). Ricardo will receive cash of $17.5m (Rs 138 crore) on completion and this may increase by a further $3.0 million (Rs 23 crore) based on Ricardo Software achieving certain revenue targets in the 12-month period post-completion. The above figures include adjustments for cash and net working capital.

Ricardo Software generated revenue of £9.3 million (unaudited) and underlying operating profit of £1.8 million (unaudited) for its financial year ended 30 June 2022, with gross assets at 30 June 2022 of £11.2 million (unaudited). As part of the disposal, Ricardo Software’s management will transfer with the business and lead the ongoing business within FOG’s STEM portfolio.

Graham Ritchie, Ricardo plc CEO said: “The divestment demonstrates further progress in optimising Ricardo’s portfolio. This, together with our acquisition of Inside Infrastructure earlier this year, presents positive momentum towards our ambition to become a leading strategic and engineering consultancy for environmental and energy transition solutions.” 

Lead image: Courtesy Ricardo