OCI Global Sells Methanol Business to Methanex for $2.05 Billion

OCI Global's Methanol Business Acquisition by Methanex

OCI Global, a prominent entity in the hydrogen and chemical sectors, has made a significant move by entering a binding equity purchase agreement to sell its complete equity interests in its Global Methanol Business to Methanex Corporation. This transaction marks an important strategic decision for OCI as it focuses on enhancing shareholder value.

Transaction Details and Financial Overview

The purchase agreement for this strategic transaction has a total consideration of USD 2.05 billion, structured on a cash-free and debt-free basis. The transaction includes a cash payment of approximately USD 1.15 billion, adjusted for anticipated net indebtedness. Furthermore, the agreement incorporates the issuance of 9.9 million common shares of Methanex. This arrangement allows OCI to benefit from the potential upside arising from the operational enhancements in the combined businesses and from market conditions in the methanol sector. Post-transaction, OCI is expected to become about a 13 percent shareholder in Methanex, positioning it as the second largest stakeholder.

Closing Timeline and Approvals

Set to close in the first half of 2025, the transaction is contingent upon fulfilling certain regulatory approvals and customary closing conditions. The Board of Directors at OCI has already given its approval and is advocating for its shareholders to do the same. Notably, the company's largest shareholder, who holds a roughly 39 percent stake, has consented to vote in favor of the transaction.

Use of Proceeds and Future Guidance

The funds raised from this sale will be pivotal for OCI as they will be pooled with the expected proceeds from prior announcements related to divesting other assets, including those in IFCo and Fertiglobe. Collectively, these divestitures are estimated to yield around USD 11.6 billion. This significant inflow will provide OCI with the necessary flexibility to strategically reduce its overall debt and return capital to its shareholders, with further details on capital allocation to be provided later.

About OCI Methanol

OCI Methanol operates as a leading methanol producer, dominating in U.S. markets and producing green methanol through its OCI HyFuels division. Its production facilities boast substantial capacity, including a methanol plant that, post-refurbishment and upgrades amounting to USD 800 million, can generate 910,000 tonnes of methanol annually. The plant operated by Natgasoline, inaugurated in 2018, adds 1.7 million tonnes to this capacity, further consolidating its competitive edge in the industry.

Strategic Positioning and Growth Initiatives

The strategic sale aligns with OCI's vision to innovate within crucial markets and enhance its position in the new energy landscape. Methanol is increasingly recognized as a vital component in the hydrogen economy and for decarbonizing various challenging sectors. This alliance with Methanex will accelerate the transition of both entities towards a more sustainable future.

Reflections from OCI Executives

Nassef Sawiris, Executive Chairman of OCI, expressed his optimism about collaborating with Methanex and highlighted the long-term value this relationship could cultivate. Highlighting the seamless integration efforts ahead, CEO Ahmed El Hoshy commended the dedicated work of the OCI team in building a competitive methanol platform.

As OCI manages this transformative period, they remain committed to their objectives of driving shareholder value and fulfilling the growing market demands for clean and sustainable energy alternatives.

Frequently Asked Questions

What is the value of the transaction between OCI Global and Methanex?

The transaction is valued at approximately USD 2.05 billion on a cash-free and debt-free basis.

When is the transaction expected to close?

The transaction is anticipated to close in the first half of 2025, pending various regulatory approvals.

What percentage of Methanex will OCI own after the transaction?

OCI is expected to own about 13 percent of Methanex following the completion of the transaction.

What is OCI Methanol known for?

OCI Methanol is a prominent methanol producer in the U.S. and features a leading green methanol division through OCI HyFuels.

How will the proceeds from this transaction be used?

The proceeds will primarily be used to reduce gross debt and return capital to shareholders, with future guidance on capital allocation forthcoming.

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