OCI Global has recently announced a significant strategic divestment, with a definitive deal valued at $2.05 billion for its entire 85% stake in its global methanol operations. This move marks another step in the company's broader strategy to streamline its portfolio and optimize its capital structure.
The transaction is set to transform OCI's financial position, as it will result in a substantial influx of cash and shares, positioning the company for future growth opportunities. The buyer, Methanex, a leading methanol supplier based in Vancouver, Canada, has agreed to acquire OCI Methanol, which includes the remaining 15% stake held by the Emirati investor Alpha Dhabi and the Abu Dhabi sovereign fund ADQ.
This deal showcases Methanex's commitment to expanding its operational footprint and production capabilities in the methanol sector. The transaction will yield $1.15 billion in cash for OCI Global, in addition to granting them 9.9 million shares of Methanex, which are valued at approximately $450 million.
This equates to a 13% ownership stake in Methanex. Furthermore, as part of this acquisition, Methanex will assume $450 million in debt and lease obligations, illustrating the complexities and financial intricacies often involved in such large-scale transactions. The agreement is anticipated to close in the first half of 2025, contingent upon regulatory approvals and customary closing conditions, alongside the consent of OCI Global's shareholders.
Notably, OCI Global's largest shareholder, who holds a 39% stake, has already expressed their support for the transaction, which is a positive indicator of shareholder alignment with the company's strategic vision. As part of the deal, OCI Global is selling two notable methanol facilities located in Beaumont, Texas.
The first facility boasts an impressive annual production capability of 910,000 tonnes of methanol and 340,000 tonnes of ammonia. This presents Methanex with a lucrative opportunity for revenue diversification, augmenting its existing operations while enhancing its market competitiveness. The second facility is operated through a 50/50 partnership with Proman, which is currently embroiled in a legal dispute regarding specific shareholder rights.
The successful sale of OCI Global's 50% interest, which accounts for 40% of the total transaction value and encompasses virtually the entirety of the associated debt, remains contingent upon the resolution of these ongoing court proceedings. Importantly, Methanex has secured an option to selectively carve out the acquisition of the Natgasoline joint venture, ensuring flexibility in executing the remainder of the deal, which also involves the green methanol producer OCI HyFuels and an inactive methanol plant situated in Delfzijl, Netherlands. This latest transaction follows OCI Global's previous divestments, including Iowa Fertilizer Co.
(IFCO), Fertiglobe, and its low-carbon initiative OCI Clean Ammonia. Collectively, these divestitures are projected to generate gross proceeds of approximately $11.6 billion, with the earmarked funds aimed at significantly reducing debt levels while also facilitating capital returns to shareholders. OCI shares have shown a positive change, trading nearly 3% higher on Monday morning, reflecting investor confidence in the company's strategic direction and the potential benefits of this significant divestment..