ADNOC Distribution To Buy Shell South Africa Downstream Assets For About $1 Billion

Abu Dhabi National Oil Company (ADNOC) Distribution has agreed to acquire Shell Downstream South Africa (SDSA) from Shell South Africa Holdings in a deal with an implied enterprise value of about $1 billion (AED3.67 billion).

The acquisition includes SDSA’s network of 580 company-owned and dealer-operated fuel stations, as well as its wholesale fuel, aviation and lubricants businesses.

The enterprise value is subject to adjustments for net debt and working capital. The transaction is expected to close in 2027, subject to customary regulatory approvals and other closing conditions.

Following completion, a 28% stake in SDSA is expected to be transferred to a local empowerment partner and an employee stock ownership plan.

ADNOC Distribution will also enter into a long-term brand licensing agreement to retain the Shell brand across South Africa’s retail service stations and lubricants business.

The company said customers would continue to receive the existing Shell-branded experience under ADNOC Distribution’s ownership.

ADNOC Distribution also plans to appoint a local partner with experience in South Africa’s fuel retail sector, regulatory environment and operating requirements. The partnership will comply with South Africa’s Broad-Based Black Economic Empowerment legislation and focus on energy security, job creation and inclusive economic participation.

Chief Executive Officer Bader Saeed Al Lamki said the acquisition marked a major milestone in ADNOC Distribution’s international expansion strategy and reflected the company’s confidence in South Africa as a high-potential, well-regulated fuel retail market.

He said the deal would accelerate the company’s international expansion, diversify its portfolio and create sustainable long-term value for shareholders, partners, customers and communities.

ADNOC Distribution said South Africa’s fuel retail market offers attractive growth prospects, supported by investment in transport infrastructure and an expanding driving-age population.

It also cited the country’s transparent regulatory framework and fuel pricing mechanisms, which it said help protect margins from inflation and currency volatility.

The acquisition is expected to increase ADNOC Distribution’s earnings per share by about 6% in the first full year after the transaction closes. The company also expects the deal to generate an internal rate of return above its hurdle rate for the fuel and convenience retail business.

South Africa will become the fourth country in which ADNOC Distribution operates. The company acquired a 50% stake in TotalEnergies Marketing Egypt in 2023 and launched its fuel retail operations in Saudi Arabia in 2018.