Dutch hydrogen producer OCI Global announced on Monday its plans to sell an 85% stake in its methanol business to Canadian giant Methanex Corp. for $2.05 billion, marking a major step in its strategy to reduce debt and return cash to shareholders.

OCI's $2.05B Methanol Biz Sale : The Transaction Details

OCI Global entered into a binding equity purchase agreement with Methanex, which will acquire OCI Methanol for $1.15 billion in cash and by issuing 9.9 million shares to OCI. The equity portion is valued at $450 million, giving OCI a 13% ownership stake in Methanex.

The sale involves OCI’s entire 85% share in its methanol subsidiary, with the remaining 15% held by Abu Dhabi investment firms ADQ and Alpha Dhabi Holding PJSC. The deal allows OCI to cut its debt significantly while participating in potential growth through its stake in Methanex.

OCI's $2.05B Methanol Biz Sale : Legal and Financial Advisors

OCI Global received legal counsel from Allen Overy Shearman Sterling, with corporate partner Romain Dambre leading the team alongside associates Brittany Beyer and Yuwei Liu. On the other side, Methanex was advised by McCarthy Tétrault LLP, Baker McKenzie LLP, Loyens & Loeff NV, and Reed Smith LLP.

In terms of financing, Methanex will fund the transaction with a mix of cash reserves and new debt financing from the Royal Bank of Canada. The companies expect the transaction to close by June 2025, pending approval from more than 50% of OCI shareholders and regulatory bodies.

Methanol Industry Impact

Both OCI and Methanex emphasized the strategic importance of the transaction, citing the critical role of methanol and ammonia in supporting industries aiming to reduce carbon emissions. OCI Methanol operates key processing facilities in Beaumont, Texas, and Delfzijl, Netherlands, as well as a low-carbon methanol business known as HyFuels.

Methanex's CEO Rich Sumner highlighted the strategic advantages of the Beaumont plants, stating they "benefit from access to North America's abundant and favorably priced natural gas feedstock" and are expected to boost global methanol production by over 20%.

Shareholder Support and Future Plans

OCI’s board of directors has endorsed the deal, and its largest shareholder, Egyptian businessman Nassef Sawiris, who controls 39% of OCI shares, has signed an agreement to vote in favor of the transaction. OCI said it will use proceeds from the $2.05 billion sale and other asset sales totaling $11.6 billion to return capital to shareholders and reduce its gross debt.

Looking Forward

OCI’s $2.05B methanol biz sale represents a significant move in the company’s broader strategy to optimize its financial structure. Methanex, listed on the Toronto Stock Exchange, expects to integrate the new assets smoothly, enhancing its position as the world’s largest methanol supplier. The deal will also provide OCI with long-term value through its stake in Methanex and potential improvements in the global methanol market.