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Methanex Rises on EMethanex Stock Sale

Zacks Equity Research

Shares of Methanex Corporation’s (MEOH) rose 4.4% during the trading session following the news that it has completed the sale of roughly 10% equity share in its Egyptian joint venture Egyptian Methanex Methanol Company S.A.E. (EMethanex) to Arab Petroleum Investments Corporation (:APICORP) for $110 million. The company’s shares eventually closed at $58.37, gaining around 3.4%.

This transaction will increase APICORP's ownership stake in EMethanex to roughly 17%. Methanex will remain the majority stake holder of EMethanex with just over 50% ownership. Remaining 33% stake in the joint venture is held by Egyptian government shareholders like Egyptian Petrochemical Holding Company (holding 12%); Egyptian Natural Gas Holding Company (holding 12%); and Egyptian National Gas Company (holding 9%).

Following this transaction, there will be no change in EMethanex’s governance or operations. Moreover, it will continue to be integrated into Methanex's organizational structure.

APICORP is a multilateral development bank established in 1975 by the Organization of Arab Petroleum Exporting Countries (:OAPEC). It raises capital through strategic equity and debt financing, and provides advisory and research services so as to facilitate the development and transformation of the Arab hydrocarbon and energy industries. APICORP has been a shareholder of EMethanex since its inception.

This transaction will mutually benefit both APICORP and EMethanex. The deal will increase APICORP’s investment scope in the Arab energy industry including downstream sectors and midstream sectors and EMethanex will benefit from APICORP's growing support. APICORP’s increased ownership in EMethanex reflects a productive mutual cooperation and reinforces APICORP's confidence in Egypt's hydrocarbon industry.

The EMethanex plant, which is located in Damietta, Egypt on the Mediterranean Sea, started its commercial operations in 2011. The facility is among the most energy efficient methanol plants globally. It is capable of producing 1.3 million tons of methanol every year. It supplies methanol to local and global markets and conforms to Methanex's global methanol supply chain.

Methanex retains a Zacks Rank #2 (Buy).

Other companies in the chemical industry worth considering are Asahi Kasei Corp. (AHKSY), Johnson Matthey plc (JMPLY) and PPG Industries Inc. (PPG). While Asahi Kasei and Johnson Matthey hold a Zacks Rank #1 (Strong Buy), PPG Industries retains a Zacks Rank #2 (Buy).

Read the Full Research Report on PPG
Read the Full Research Report on MEOH
Read the Full Research Report on AHKSY
Read the Full Research Report on JMPLY


Zacks Investment Research