Investing.com -- Berenberg downgraded OCI to Hold from Buy, saying the company’s years-long strategic reshaping is close to completion and leaves limited upside for shareholders.
The Dutch chemicals firm has been spinning off major assets, including its fertilizer, methanol, and ammonia businesses, returning roughly $4.4 billion to investors so far.
Following shareholder approval at its May annual meeting, OCI plans an additional $1 billion payout once the sale of its methanol unit to Methanex (NASDAQ:MEOH) closes, expected in the first half of 2025.
Berenberg expects that after completing the handover of its Texas Clean ammonia project to Woodside (OTC:WOPEY) Energy in late 2025, OCI’s majority shareholder, the Sawiris family, could launch a tender offer for the remaining shares at a modest premium.
“The company is approaching a liquidation moment, with OCI’s main shareholders willing to delist the shares,’” Berenberg wrote, adding that once the Methanol deal is finalised, management may also pursue a sale of its remaining European nitrogen assets.
However, the brokerage noted that finding a buyer could be challenging as key players like Yara and Grupa Azoty are scaling back EU operations.
OCI’s residual assets would consist of the nitrogen unit, which includes a 1.2 million tonne per annum ammonia terminal in Rotterdam and 1.6 million tonne ammonium nitrate capacity, and a 14.5% equity stake in Methanex.
Berenberg sees limited catalysts for further value creation, cutting its price target to €8.70 to reflect the May 7 distribution.
It values the company based on a sum-of-the-parts analysis, factoring in expected transaction and restructuring costs of $300 million and estimating a partial recovery from contingent payments tied to the Fertiglobe deal.
The bank expects US regulatory approval of the Methanol sale, though with some remedies to address market concentration concerns.