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Highlights
- Ricardo has entered into an agreement to acquire 85% of E3 Advisory for AUD $101.4 million (£51 million), with the deal subject to the disposal of Ricardo Defense.
- The company plans to purchase the remaining 15% of E3 Advisory by January 2028.
- The acquisition offers a competitive valuation at an 8.6x EBITDA multiple based on FY23/24 results.
Ricardo (LSE:RCDO), a global strategic and engineering consultancy, has announced a significant acquisition agreement to purchase 85% of E3 Advisory, an Australian-based consultancy firm specializing in energy, transport, and infrastructure sectors. The transaction, valued at approximately AUD $101.4 million (£51.0 million), underscores Ricardo's commitment to expanding its presence and capabilities in critical areas of environmental and energy transition.
Conditions for Completion and Future Plans
The acquisition is conditional upon the successful disposal of Ricardo Defense, a segment that the company has recently announced plans to divest. Following this, Ricardo intends to finalize the purchase of the initial 85% stake, with plans to acquire the remaining 15% by January 2028. The company’s strategy to integrate E3 Advisory into its operations aligns with its broader goal of becoming a global leader in environmental and energy transition consulting.
Strategic Value and Attractive Valuation
The terms of the deal present an attractive investment for Ricardo, with the purchase priced at a multiple of approximately 8.6 times E3 Advisory's expected EBITDA for the financial year 2023/24. This valuation reflects the solid financial performance and growth potential of E3 Advisory, which boasts a highly skilled team and a proven track record in delivering successful infrastructure projects across a range of sectors, including transport, clean energy, water, and mining.
Complementary Expertise and Geographic Reach
E3 Advisory’s deep expertise and impressive portfolio of projects complement Ricardo’s own strengths in the energy and transport infrastructure domains. The firm’s experience in advising both governmental and private sector clients through the entire infrastructure project lifecycle makes it an ideal fit for Ricardo's strategic focus on expanding its consultancy services. Moreover, E3 Advisory’s presence in key markets aligns well with Ricardo’s geographic objectives, creating potential for synergies and accelerated growth in the region.
Aligning with Ricardo’s Strategic Vision
This acquisition is in line with Ricardo’s stated strategy to become a world-leading consultancy in the environmental and energy transition fields. By integrating E3 Advisory into its operations, Ricardo enhances its ability to offer tailored solutions to clients navigating the challenges of transitioning to more sustainable and energy-efficient systems.
Funding the Acquisition
The acquisition will be funded through the net proceeds from the sale of Ricardo Defense. These proceeds will cover the cash consideration for the initial 85% stake, along with any associated acquisition costs, ensuring a smooth financial transition for Ricardo as it strengthens its consulting capabilities.
