AIM-quoted Science Group (LON: SAG) is making a large gain on its stake in environmental and engineering consultancy Ricardo (LON: RCDO) following a 430p/share cash bid from WSP Group. Canaccord Genuity estimates that Science Group will make a 70% return in four months.
Since February, Science Group has built up a 21.8% stake in Ricardo. It has immediately sold 19.9% of Ricardo to WSP and will receive £53.5m in cash before the end of June. The rest of the cash for the remaining stake of around 1.9% will be received when the bid goes through. That should bring in £4.7m. Science Group had requisitioned
Previously, Science Group was expected to have net cash of £11.6m at the end of 2025. The additional cash will provide funding for acquisitions. The Science Group share price rose 9.68% to 510p, which is a new high.
The bid, which is similar to the level of the share price at the beginning of the year, values Ricardo at £280m. The latest trading statement from Ricardo indicates that it will fall into loss in 2024-25.