Shares of Methanex Corp (NASDAQ:MEOH) have been on a downtrend since the company announced it had inked a definitive agreement to buy OCI Global's international methanol business.

Concerns around the transaction risks associated with the acquisition are unlikely to be "easily assuaged" in the near term, according to Barclays analyst Mike Leithead.

Leithead downgraded the rating for Methanex to Equal-Weight, while cutting the price target from $56 to $44.

The Methanex Thesis: The company has agreed to acquire OCI's methanol business for $2.05 billion, Leithead said in the downgrade note.

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While there are "long-term strategic merits" from this deal, "investor concerns around the transaction risks are neither likely to be easily assuaged in the near term nor sufficiently discounted / de-risked in current equity valuation," the analyst wrote. The acquisition spells added leverage, which brings increased volatility, he added.

For many investors, the bull case for Methanex was based on "a step-change in earnings power / cash conversion as G3 ramps up in 2H'24 and the resumption of returning healthy amounts of cash to investors starting in 2025," Leithead wrote.

"That no longer will be the case and this thesis pivot likely leads to some ownership rotation, which also presents an overhang on shares," he further stated.

MEOH Price Action: Shares of Methanex had declined by 5% to $37.14 at the time of publication on Tuesday.

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