On Monday, Methanex (NASDAQ:) Company (NASDAQ:MEOH) retained its Sector Outperform score and a worth goal of $60.00, following the announcement of its acquisition of OCI’s methanol enterprise. The deal, valued at $2.05 billion, is anticipated to extend Methanex’s world manufacturing capability by a minimal of 20%.
The transaction particulars embody a fee of $1.15 billion in money, the issuance of roughly 9.9 million shares at an estimated worth of $45 per share, amounting to $450 million in fairness, and the idea of $450 million in debt and leases. After the transaction’s completion, Methanex may have round 77 million shares excellent, with OCI turning into a 13% shareholder within the firm.
Methanex plans to finance the acquisition by way of out there money and extra debt. The acquisition is projected to be instantly accretive to Methanex’s money circulate. The preliminary deal a number of is about at 7.5 instances, with expectations that it would lower to round 6.5 instances over time.
The mixing of OCI’s methanol enterprise is a strategic transfer for Methanex, aiming to solidify its place within the world market. The transaction is structured to reinforce Methanex’s manufacturing capabilities considerably, offering a considerable increase to the corporate’s operational scale.
In different latest information, Methanex Company has skilled a number of important developments. The corporate has been the topic of study by Scotiabank and RBC Capital. Scotiabank reiterated its Sector Outperform score on Methanex shares, sustaining a gentle worth goal of $60.00.
The agency famous a slight uptick in methanol costs and projected an EBITDA of round $1,007 million for Methanex, surpassing the consensus estimate of $960 million. In the meantime, RBC Capital maintained its Sector Carry out score for Methanex with a gentle worth goal of $55.00, contemplating the potential dangers of a worldwide financial downturn or a decline in vitality costs.
Scotiabank additionally highlighted Methanex’s potential free money circulate, estimating it at $6 per share for the yr 2025. The agency’s evaluation suggests a possible improve in shareholder worth as Methanex prepares to redirect nearly all of its free money circulate in direction of shareholder returns, presumably by way of buybacks.
Additional, Methanex introduced a short lived shutdown of its Egypt methanol manufacturing facility as a consequence of a decreased fuel provide and is at present participating with its associate and fuel provider to revive operations.
InvestingPro Insights
As Methanex Company (NASDAQ:MEOH) embarks on its strategic acquisition of OCI’s methanol enterprise, InvestingPro information and ideas present a glimpse into the corporate’s present monetary well being and analyst sentiment. With a market capitalization of $2.7 billion and a P/E ratio standing at 18.65, Methanex seems to be valued at a stage that displays its regular earnings. Notably, the corporate’s valuation implies a robust free money circulate yield, which may sign a constructive outlook for buyers looking for cash-generating investments.
An InvestingPro Tip highlights that 4 analysts have not too long ago revised their earnings upwards for the upcoming interval, suggesting confidence in Methanex’s monetary prospects post-acquisition. Moreover, regardless of a latest dip in inventory worth during the last week, Methanex has proven resilience by sustaining dividend funds for 23 consecutive years, with a present dividend yield of 1.74%. This monitor file of constant dividends might enchantment to income-focused buyers.
For these interested by additional insights, InvestingPro affords extra tips about Methanex, which might be explored for a deeper understanding of the corporate’s efficiency and outlook. These insights, mixed with the upcoming improve in manufacturing capability, place Methanex as an organization price watching within the methanol business.
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