Ricardo PLC (LSE:RCDO) has announced the conditional sale of its Ricardo Defense business to Proteus Enterprises and Gladstone Investment Corporation for $85 million (£67.5 million).
The transaction, expected to complete by the end of the year, reflects Ricardo's ongoing strategy to move away from the defence sector in favour of environmental and energy-transition solutions.
Ricardo Defense accounted for 26% of the group's revenue and 60% of its operating profit in the last financial year.
The unit has a history of providing integrated vehicle engineering and technical solutions to the US Department of Defense.
According to Ricardo, the sale will enable the company to redeploy capital toward its strategic growth objectives.
Alongside the divestment, Ricardo also announced its acquisition of a controlling 85% stake in Australian consultancy E3 Advisory for 101 million Aussie dollars (£51 million)
Ricardo intends to acquire the remaining 15% by 2028.
E3 Advisory specialises in infrastructure, transport, clean energy, and water sector consulting, with a strong presence in Australia and New Zealand.
"The acquisition of E3 Advisory complements this by increasing our mix of strategy consulting services, improving our portfolio’s quality, and enabling long-term growth in our target markets,” said Graham Ritchie, chief executive of Ricardo.
Ricardo plans to use proceeds from the defence business sale to finance the E3 Advisory acquisition.