Morningstar | FMC Shares Rally Amid Albemarle Acquisition Speculation; No Changes to Our FVEs
On Sept. 5, Reuters reported that Albemarle management is interested in purchasing FMC's lithium business, which will be named Livent Corporation. FMC plans to spin off a minority equity stake in Livent later this year. If the market valuation of Livent is below Albemarle's valuation of the business, Albemarle management said it would try to acquire the entire Livent business. We note, however, that no deal between Albemarle and FMC has been announced.FMC shares were up nearly 3% in pre-market trading in response to the new story. The FMC minority IPO aims to raise $500 million. If FMC is unable to raise $500 million at management's intended number of shares, we think FMC will likely to sell fewer Livent shares and is also less likely to agree to sell the entire business unless Albemarle, or another buyer, would offer a substantial premium. Our base case for both Albemarle and FMC are unchanged. We maintain our $125 per share and $81 per share fair value estimates for Albemarle and FMC, respectively. Our narrow-moat ratings for both companies are also unchanged.
Albemarle is a global developer, manufacturer and marketer of chemicals across a range of end markets including energy storage, petroleum refining, consumer electronics, construction, automotive, lubricants, pharmaceuticals, crop protection and custom chemistry services. The company's segments include: Lithium, which develops and manufactures a range of basic lithium compounds and lithium specialties and reagents; Bromine Specialties, which includes products used in fire safety solutions and other chemicals applications; and Catalysts, which includes Clean Fuels Technologies, fluidized catalytic cracking catalysts and additives, and performance catalyst solutions.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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