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.
Livent manufactures lithium. The company's primary products, namely battery-grade lithium hydroxide, butyllithium and high purity lithium metal are inputs used in various applications. The company produces lithium compounds for use in applications that have specific performance requirements, including battery-grade lithium hydroxide for use in lithium-ion batteries. The company also supplies butyllithium, which is used as a synthesizer in the production of polymers and pharmaceutical products, as well as a range of specialty lithium compounds including high purity lithium metal, which is used in the production of lightweight materials for aerospace applications and non-rechargeable batteries.
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.
We have operations in 27 countries.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.