EUR 464.55 For Business Accounts Only

Last IPO-Spin for 2019 of Pure-Play Lithium Producer

With Livent Corp. (LTHM) trading at a 15% free-float for the last 4 months, the stock price has seen a -26% drop from its IPO price, underperforming its peers over this period. However, with its Parent FMC Corp. (FMC) distributing the rest of its stake to shareholders tomorrow, this bodes well for the pure-play lithium producer.

The Edge Intelligence...
Philadelphia-based FMC Corp. (FMC) first began its restructuring phase when the company did a deal with DowDuPont (DWDP) and selling its Health and Nutrition line to DWDP while FMC acquired a significant portion of DWDP’s crop protection business. This divestiture of DWDP’s crop chemical business was helped move forward by the DuPont and Dow merger. Likewise, FMC became the 5th largest crop protection chemical company in the world in terms of revenue. After this deal closed in November 2017, FMC had two main businesses, (i) its Agricultural Solutions and (ii) its Lithium business.

Subsequently, FMC officially announced the IPO-Spinoff of the Lithium business on February 12, 2018 during its Q4FY17 earnings report. Here, the plan was to IPO approximately 15% of its Lithium business, called Livent Corp. (LTHM), while FMC retained the remaining shares. LTHM listed on the NYSE on October 11, 2018, at $17 a share with the agreement from FMC not to distribute the remainder of shares for 120 days after the IPO date. The final 84.25% stake will be Spun off tax-free to shareholders on March 1, 2019, with normal trading to begin on March 4, 2019.

The Edge View (LTHM, IPO-Spinoff)…
A leader in lithium products (lithium batteries to vehicle manufacturers, portable electronics, aerospace alloys, greases, pharmaceuticals, etc.), LTHM is centered on growth in the electric vehicle market. LTHM’s Adj. EBITDA margin is a function of its low-cost position operating one of, if not the lowest, cost lithium carbonate and lithium hydroxide operations in the world (as reported by Roskill, which is based in Argentina). This provides a distinct competitive advantage against current players and future entrants. After being handcuffed by its free-float, we believe these dynamics bode well for LTHM and could present an opportunity at current levels.