Methanex to Purchase Methanol Business of OCI for $2.05 Billion

Methanex Corporation has signed a definitive agreement to acquire OCI Global’s international methanol business for $2.05 billion. The acquisition includes two large-scale methanol production facilities in Beaumont, Texas, with one also producing ammonia, along with OCI’s low-carbon methanol business and a currently idle methanol plant in the Netherlands. According to Rich Sumner, Methanex’s President and CEO, this acquisition presents a significant opportunity to expand Methanex’s production capabilities. The Beaumont plants will benefit from the ample supply of natural gas in North America, which will increase Methanex’s global methanol output by over 20%. Sumner emphasized that the acquisition aligns with the company’s long-term goals of industry leadership, operational efficiency, and financial resilience, and will enhance Methanex’s existing skills in ammonia production and low-carbon methanol operations.

The deal also marks an important strategic move for Methanex by expanding its portfolio in North America, which is considered a low-risk jurisdiction with an abundant and cost-effective supply of feedstock. Methanex expects to achieve approximately $30 million in annual cost synergies, primarily from reduced logistics and administrative costs. With both companies sharing similar operating models, integration costs are expected to be low, while Methanex plans to leverage its global expertise and operational knowledge to maximize the value of these assets. The acquisition will also allow Methanex to implement its own risk-based management strategies at the newly acquired facilities.

One key component of the acquisition is OCI’s ammonia production, which Methanex views as a complementary commodity to methanol. Ammonia not only serves industrial and agricultural purposes but also offers potential as a low-carbon fuel for power generation and marine fuel, thus diversifying Methanex’s revenue streams. Sumner expressed confidence that this new venture into ammonia will strengthen the company’s position in the evolving energy market.

Dean Richardson, Methanex’s Senior Vice President and CFO, expects the acquisition to significantly boost the company’s financial performance. With an estimated annual EBITDA increase of $275 million, Methanex projects a total adjusted EBITDA of $850 million at a realized methanol price of $350 per metric ton. Methanex has a robust financing plan in place to support this acquisition, including the repayment of its $300 million bond scheduled for December 2024. The company aims to maintain its financial flexibility and plans to reduce its debt-to-EBITDA ratio within 18 months of closing.

The acquisition includes several key assets: a methanol facility in Beaumont, Texas, with the capacity to produce 910,000 tonnes of methanol and 340,000 tonnes of ammonia annually; a 50% interest in the Natgasoline LLC joint venture, which operates another Beaumont-based methanol facility with an annual production capacity of 1.7 million tonnes; and OCI HyFuels, which specializes in producing low-carbon methanol and has extensive trading and distribution capabilities for renewable natural gas (RNG). Additionally, Methanex will acquire a methanol plant in Delfzijl, Netherlands, with a production capacity of 1 million tonnes, though the facility is currently idled due to high natural gas prices. Methanex sees significant potential in revitalizing this plant once market conditions improve.