Ricardo Regulatory News (RCDO)

8 November 2012

Ricardo plc

Proposed acquisition of AEA Europe

Ricardo plc ("Ricardo" or the "Group"), a market leading engineering and consulting company announces that following detailed discussions it has concluded the terms of an irrevocable proposal to acquire the business, operating assets and employees engaged in the business of AEA Technology Plc ("AEA Europe"), a subsidiary of AEA Technology Group plc, from administration, for a total cash consideration of £18.0 million. The proposed acquisition is conditional upon, amongst other things, the appointment of administrators to AEA Europe and execution of pre-agreed documentation by AEA Europe (in administration), which is expected to occur later today. A further announcement will be made in due course.

AEA Europe is a leading environmental consultancy providing technical consultancy services to the UK public sector, the European Commission, international agencies and private sector organisations. No historic defined benefit pension liabilities or bank debt will transfer to Ricardo as part of the transaction.

Key points

·; AEA Europe will add c400 UK based staff and provide Ricardo with an environmental consulting capability comprising strong global potential based on scientific and technical excellence

·; AEA Europe has a long history of professional consulting, underpinned by excellent teams driven by a core agenda of global environmental improvement and sustainability

·; The enlarged group will be uniquely positioned to advise on key strategic issues facing industry and governments worldwide

·; Acquisition is expected to be earnings enhancing in the current financial year and will be funded from the Group's cash resources and bank facilities.

Details of proposed acquisition

Under the terms of the proposal, Ricardo will acquire just under 400 employees based in five UK regional offices, operating assets, customer relationships, contracts and the AEA brand globally.

In the year ended 31 March 2012, the assets to be acquired under the proposal generated revenue of £39.0 million and an operating profit of £3.3 million. Gross assets of £11.5 million are to be acquired under the proposal. The acquisition is expected to be earnings enhancing in the current financial year and will be funded from the Group's cash resources and bank facilities and would be reported within the Technical Consulting segment.

Ricardo and AEA Europe share similar long term strategic drivers based on the environmental challenges of meeting increasing energy demand whilst reducing carbon emissions, maintaining air quality and managing scarce resources. The acquisition will bring together two strong and highly respected businesses with a history of the delivery of major national and international programmes.

AEA Europe has a well-established track record of advising governments in the development of environmental legislation, which in turn underpins Ricardo's technical engineering business. AEA Europe is a major supplier of services to the UK government across a range of government departments, most notably the Department for Environment, Food and Rural Affairs (Defra) and the Department of Energy and Climate Change (DECC).

AEA Europe will add further strategic skills in the areas of deep legislative insight and economic analysis, and together AEA Europe and Ricardo are uniquely positioned to advise on key strategic issues facing industries and governments worldwide.

The clients of Ricardo and AEA Europe are complementary. It is anticipated that Ricardo's international network will allow AEA Europe to develop a more global business, leveraging Ricardo's industrial client base. In addition, AEA Europe's strong links with government organisations are expected to enhance Ricardo's relationships in this customer area.

AEA Europe has a strong reputation for its technical capabilities and has a pre-eminent position in advising on and developing major environmental policies. This acquisition supports Ricardo's ongoing strategy and marks the continued development of the Group as the global multi industry supplier for high quality strategic, technical and engineering services.

The two businesses share a similar technology focussed professional culture, based on the delivery of innovative world class services to our customer base, utilising highly skilled employees. Our common long term strategic drivers of reducing carbon emissions, maintaining air quality and the management of scarce resources will provide an excellent opportunity to further develop Ricardo's expertise in delivering high value-added services to our global customer base.

Analyst conference call

Following this announcement, Dave Shemmans and Paula Bell will be hosting a conference call for analysts today at 08.30 a.m. For dial-in details please contact Kreab Gavin Anderson on ricardo@kreabgavinanderson.com

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