Ricardo PLC (LON:RCDO) said it has sold its software business unit for up to US$20.5mln (£16.8mln) to FOG Software Group, a division of Constellation Software Inc. (TSX:CSU).
Ricardo will receive cash of US$17mln, which may increase by US$3mln if Ricardo Software achieves certain revenue targets in the 12-month period following completion.
The sale will help Ricardo achieve sustainable long-term growth in energy and environmental solutions by optimising its portfolio, the consultancy said in a statement, adding with the proceeds reinvested, the Ricardo Software business will be able to grow under new ownership.
"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," said Graham Ritchie, chief executive.
Ricardo said FOG Software is ideally suited for Ricardo Software's next phase of growth, due to its STEM (Science, Technology, Engineering, and Mathematics) portfolio of businesses, which include CFD, visualisation and analysis software companies.
Ricardo Software's management will transfer with the business and run the ongoing STEM business within FOG.
FOG Software will continue to provide Ricardo with software licenses, ensuring continuity of service to its automotive and industrial customers.
For the financial year ended 30 June 2022, Ricardo Software generated revenues of £9.3mln and underlying operating profits of £1.8mln with gross assets of £11.2mln.
Ricardo shares were trading 0.97% down at 410.00p midmorning.