Ricardo expands rail consultancy business with bolt-on buy of LR Rail

Engineering and consulting outfit Ricardo is spending £42.5m in cash to buy Lloyd's Register Rail (LR Rail), an international rail consultancy and assurance business boasting blue chip clients.

The deal, which is being paid on completion, on a cash-free and debt-free basis, is expected to be completed before July 2015 and will see the launch of Ricardo Rail, combining LR Rail with the company's existing rail expertise.

Ricardo expects the acquisition to be immediately enhancing to underlying earnings.

Group chief executive Dave Shemmans said LR Rail has an "impressive market reputation and a very similar culture of quality and excellence in engineering to Ricardo".

"The combination of their geography, product offering and independent assurance and consultancy expertise complements our own, and will position Ricardo for the growth in this important sector," he said.

Shemmans added that increasing global urbanisation should increase the demand for assurance, consulting and engineering expertise in rail.

Ricardo's shares were up 5.5% at 807.9p by 08:29 on Friday.