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Sparks commentary

TMT

Sparks

Nanoco (LSE:NANO) settles LG litigation for $5m
Published by Finlay Mathers
What’s going on here?
Nanoco announced a litigation settlement with LG Electronics for $5m gross, resolving their dispute without admission of fault by either party. The company incurred $0.6m in litigation costs, leaving net proceeds of $4.4m. Other settlement terms remain confidential, according to the regulatory filing.
Nanoco previously won a gross settlement of $150m from Samsung in February 2023, relating to infringement of the same IP following a long, protracted process. Samsung has been the dominant supplier of quantum dot televisions, but more recently LG, along with other vendors—HiSense, TCL, etc.—have entered the market. Nanoco has always flagged that any settlement from other vendors would be substantially smaller, but the time to resolution (c. 7 months) is significantly shorter and the percentage of legal costs paid is much less. The company remains committed to monetising its IP and therefore legal action against other vendors is possible, although likely settlements are expected to be smaller in value.
What does this mean?
The company has not disclosed when the settlement will be received, but if we were to include it in our enterprise value calculation now (Y/E cash was £14m), it would imply that the market is valuing Nanoco’s operational businesses at close to zero. Some litigation costs were also factored into the company’s monthly cost guidance of £0.4m. The settlement therefore provides the company with useful extra headroom to pursue the commercialisation of its opportunities in sensing, further validates the company’s IP, and demonstrates its ability to monetise it.
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