A North Charleston chemical company is about to be added to the sparse mix of public companies based in the region.
Investors will be waiting on the reaction.
Ingevity won’t formally break away from parent WestRock Co. until May 15. But some of its roughly 42 million shares are set to begin trading this week on the New York Stock Exchange — as early as Monday — during what is known as a “when-issued” period.
Conventional buying and selling of “NGVT” is expected to start on the Big Board on May 16.
The two-week trading trial period is conditional, meaning no money or stock will change hands until the new certificates are distributed to investors. It’s a fairly common practice in corporate spin-offs.
Ingevity spokesman Jack Maurer referred to a definition provided on Investorpedia.com. The financial website stated that stocks, bonds and other securities trade on a when-issued basis “when they have been announced but not issued.” Among other reasons, the process can help establish a market value for a new public company by giving investors “an indication regarding the level of interest a new issue will attract.”
Leaving nothing to chance, Ingevity CEO Michael Wilson and his top three executives hit the road last week to spread the word about the Virginia Avenue business. They made their pitches Thursday with financial analysts in New York City in a roughly three-hour presentation, starting with an early lunch and ending with a QA.
Ingevity makes and sells compounds used in printing inks, asphalt paving and adhesives for customers that include the agricultural, paper and oil industries. It also concocts carbon powders that go into automotive emissions systems and have applications in air, water and food purification systems.
Ingevity was launched decades ago by a predecessor to paper and packaging giant MeadWestvaco Corp. to develop chemicals from pine-tree by-products. In recent years, the once-obscure division has blossomed into a big business. The company now employs about 1,500 workers at 25 locations worldwide, including a newly built $100 million plant in China.
The Ingevity stock market debut will cap a fast-and-furious process in the company’s evolution.
MeadWestvaco, a major local employer since the 1920s, set the wheels in motions when it announced more than a year ago it was looking to spin off its high-growth MVW Specialty Chemicals unit into a standalone business. That came after Starboard Value, the same activist investment fund that’s been shaking up ailing Internet pioneer Yahoo, pushed for the change.
A few months passed before MeadWestvaco announced that it would be sold lock, stock and barrel to rival Rock-Tenn Co. in a deal that created WestRock last summer. The new management decided to proceed with the spin-off, and MWV Specialty Chemicals was rebranded as Ingevity on Sept. 1 in preparation for the transition.
Local investors who owned MeadWestvaco — and exchanged those shares for WestRock stock as part of last year’s buyout — have skin in the deal. They will be adding some Ingevity to their portfolios May 16.
The company’s Wall Street close-up comes as sales and profits are slipping, partly because of falling prices and demand for some of its commodity products. As a result, WestRock slashed Ingevity’s value by $478 million to $1.6 billion in January.
The stock market will have the ultimate say Monday, after the opening bell sounds at 9:30 a.m. It’s likely that Ingevity will become the big fish in the small pond of Charleston-based public companies.
As of Friday, Blackbaud Inc. led the pack. The Daniel Island software firm’s revenue last year was $638 million — $330 million behind Ingevity’s sales.
Contact John McDermott at 843-937-5572.