Ricardo to acquire Lloyd’s Register Rail and create an international rail business

17 April 2015

  • Share and Asset Purchase Agreement will see the Lloyd’s Register Rail (LR Rail) consultancy and assurance business transfer to Ricardo ownership 
  • Ricardo Rail will be launched to combine LR Rail with existing Ricardo rail industry expertise in powertrain and driveline systems, lightweight structures and new technology and product innovations
  • Ricardo Rail will be uniquely positioned to exploit the expanded global footprint of the combined business
  • The acquisition will be immediately enhancing to underlying earnings and will be funded from the Group's enlarged bank facilities 

Ricardo Rail
Ricardo CEO Dave Shemmans (left) and Lloyd's Register CEO Richard Sadler (right)

Ricardo has announced today that it has signed a Share and Asset Purchase Agreement to acquire the business, operating assets and employees engaged in the businesses of LR Rail, from Lloyd’s Register Group. The total cash consideration is £42.5 million, subject to any adjustment to reflect normalised levels of working capital. Ricardo will acquire the whole of the issued share capital of Lloyd's Register Rail Limited and Lloyd's Register Rail Europe B.V. together with various other assets relating to the rail business of Lloyd's Register Group Limited and the group of companies of which it is the ultimate holding company. The acquisition will be materially complete on or before 1 July 2015 and the business will operate as the core of a new international rail business within Ricardo plc and combined with Ricardo’s existing rail industry expertise, to be branded Ricardo Rail. Current LR Rail managing director Paul Seller will take on the role of managing director of the Ricardo Rail business.

Ricardo’s growth strategy is underpinned by global challenges related to urbanization, resource scarcity, air quality, climate change, energy security, sustainability and waste. This acquisition is central to the delivery of growth in Transportation and Security, one of the company’s three strategic pillars alongside Energy, and Scarce Resources and Waste. The acquisition of LR Rail and the future growth of this business is driven by the increasing global interest in urban and high speed networks and the integration of critical and complex rail technologies as governments respond to accelerating levels of urbanization. Ricardo therefore sees a strong and increasing demand for technical consulting and assurance services in the rail sector.

LR Rail is a highly successful rail consultancy and assurance business and is a trusted partner to a wide range of international clients. The company recorded on a standalone basis revenues of £48.1 million in 2014 and has a staff of 440 rail engineers and specialists located at offices across Europe, Asia and the Middle East. LR Rail uses its understanding of critical and complex technologies and its independent expert advice to provide services ranging from rolling stock design, signalling and train control, intelligent rail systems, operational efficiency improvement, training and independent assurance services.

Lloyd’s Register Group took the decision in 2014 to seek a purchaser for its rail business that would be better placed to prioritize the resources and investment, and provide the strategic focus on the rail sector, needed to build a world class global rail business. Ricardo shares the same values of integrity, quality and safety that are expected by LR Rail’s customers and which have been the foundation of LR Rail’s success. Ricardo has also confirmed that it is committed to supporting the aspirations of the management team to accelerate growth and international reach.

“I’m delighted to be able to announce today’s share and asset purchase agreement with Lloyd’s Register Group and look forward to welcoming LR Rail’s employees to the global Ricardo team and am excited about the prospects for the new Ricardo Rail business under the leadership of Paul Seller,” commented Ricardo plc CEO Dave Shemmans. “LR Rail has an impressive market reputation and a very similar culture of quality and excellence in engineering to that of Ricardo, and will be an exceptionally good fit with Ricardo in terms of culture, geography, product offering and business model.”

Ricardo Rail: a new global force in rail consultancy and assurance
With accelerating global urbanization Ricardo sees a strong and increasing demand for technical consulting and assurance services in the rail sector. The new Ricardo Rail business will be ideally placed to provide a unique mix of services by bringing together an established world leader in powertrain and driveline systems – including the latest alternative fuel, energy storage, and electrical power systems analysis – together with one of the world’s most respected brands in railway consulting and assurance.

“We have an excellent team and a strong reputation in the industry, and I believe that in Ricardo, we have an ideal new owner which shares our strategic vision to create a truly global rail business,” commented LR Rail managing director Paul Seller, who post-acquisition will take-on the role of managing director of the new Ricardo Rail business. “Ricardo has a highly respected and long established brand and shares our ethos of independence, engineering excellence, safety and quality. With its strong reputation in locomotive and multiple unit powertrain and driveline systems – from research and concept development through to series manufacture of specialist rail products – it provides an excellent complementary fit with LR Rail’s own areas of expertise. Through Ricardo Rail we will thus be able to provide an expanded range of value-added services to customers across a significantly enhanced global footprint.”

Ricardo Certification Ltd: continued independent expert assurance
In parallel with the establishment of the Ricardo Rail business, a standalone assurance management entity, to be known as Ricardo Certification Ltd, will be established to hold and manage all future accreditations. Moreover, the fact that Ricardo plc is fully independent of any major manufacturer of rail vehicles, locomotives, signalling systems, infrastructure or government or other regulatory interest, enables the complete independence of assurance services to continue under the new ownership structure.

“Today’s announcement is exciting news for the employees and customers of both LR Rail and Ricardo,” added Paul Seller. “We look forward to forming the new Ricardo Rail business and on working together to create a truly global rail business that uses its independence, passion and understanding of critical and complex technologies to add value to our clients, making us integral to their future success.”