LBO for Canada's Methanex unlikely – RBC

18 April 2007 18:23  [Source: ICIS news]

TORONTO (ICIS news)--Methanex, the Canada-based international methanol maker, is not likely to become the target of a leveraged buyout (LBO), analysts at Toronto-based RBC Capital Markets said on Wednesday.

The analysts calculated that methanol contract prices would need to stay above $275/tonne for a long time to justify an LBO.

“We believe this price assumption would be quite optimistic,” RBC said, and pointed to large new industry capacity due to come onstream in coming years.

RBC expects long-term methanol prices of around $205/tonne.

The April methanol contract for the US market averaged $354/tonne, according to global chemical intelligence service ICIS pricing. That is down from a January peak at $584/tonne.

Methanex’s shares soared 8.9% on Monday, in part driven by a wave of buyouts and takeovers in Canada and the recent LBO rumours surrounding Dow Chemical.

This had triggered speculation that Vancouver-based Methanex may have become an LBO target.

Methanex’s shares were priced at $23.18/share, down 1.61%, in early Wednesday afternoon trading in New York. This compares with Monday's closing price of $24.02/share, and the stock's 52-week high/low range of $29.50-$17.99.

RBC's price target for Methanex is $19/share.

By: Stefan Baumgarten
+1 713 525 2653

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