Morningstar | FMC Completes Livent Spin-Off; Our Stand-Alone FVE Is $76, With Outlook Unchanged
On March 1, FMC completed the full divestiture of its former lithium business, Livent. FMC transferred all shares of Livent shares held by FMC (approximately 84% of total Livent shares) to existing FMC shareholders at a rate of 0.935301 shares of Livent for each FMC share held. On March 4, FMC shares began to trade on an "ex-dividend" basis, excluding the value of Livent. Accordingly, we have updated our FMC valuation model to reflect the full divestiture of Livent. Our FMC fair value estimate falls to $76 per share from $92, as the reduction of Livent's value of ($17 per FMC share) is partially offset by the time value of money ($1 per share). We maintain our Livent fair value estimate of $18 per share. Our narrow moat rating for both companies is also unchanged.With the full divestiture complete, FMC and Livent will now operate independently of one another. We have been in favor of the separation since it was announced as the crop chemicals and lithium businesses, which have few operating synergies between them, will no longer have to compete for capital or management focus.
FMC will now operate as a pure-play crop chemicals company, which is the culmination of management's portfolio strategy. FMC acquired two multibillion-dollar crop chemicals businesses beginning in 2015, while divesting all noncrop chemicals businesses.
FMC is an agricultural sciences company. The company provides solutions to growers around the world with a product portfolio fueled by a discovery and development pipeline in crop protection, plant health, and personnel pest and turf management. This combination of technologies includes insect control products based on Rynaxypyr? and Cyazypyr? active ingredients; Authority?, Boral?, Centium?, Command? and Gamit? branded herbicides; Talstar? and Hero? insecticides; and flutriafol-based fungicides. The company's products are used in agriculture to improve crop yield and quality by controlling a range of insects, weeds and disease, as well as in non-agricultural markets for pest control.
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