Adnoc Distribution has signed a definitive agreement to acquire 100 per cent of Shell Downstream South Africa (SDSA), as the UAE's largest fuel and convenience retailer continues to expand its international portfolio.
The unit of state-controlled global oil and gas company Adnoc is acquiring the assets from Shell South Africa Holdings for an implied enterprise value of about $1 billion, the company said in a statement on Tuesday to the Abu Dhabi Securities Exchange, where its shares are traded.
The enterprise value of the proposed acquisition is prior to adjustment for net debt and working capital. Adnoc Distribution expects to close the deal next year, subject to regulatory and other customary conditions.
The agreement will include SDSA's network of 580 fuel stations, along with its wholesale fuel, aviation and lubricants operations, "significantly advancing" Adnoc Distribution's retail footprint in Africa, the company said.
“The proposed acquisition marks a significant milestone in Adnoc Distribution's international growth strategy and reflects our confidence in South Africa as a high-potential, well-regulated fuel retail sector," said Bader Al Lamki, chief executive of Adnoc Distribution.
With the completion of the deal, Adnoc Distribution will enter into a long-term brand licensing agreement to retain the Shell brand for retail service stations and lubricants businesses in South Africa, the largest African economy. The company also said a 28 per cent stake in SDSA is expected to be sold to a "local empowerment partner and employee stock option plan" once the deal is done.
“By bringing it into the Adnoc Distribution family, we plan to accelerate our international expansion, diversify our platform and create sustainable long-term value for our shareholders," Mr Al Lamki said.
Continued expansion
Adnoc and its units across the hydrocarbons supply chain have been actively investing to expand their global footprint. In the past few years, the companies have poured billions of dollars into buying assets from the Americas to Europe and Asia.
Adnoc Distribution is scouring markets for more deals in Africa, which Mr Al Lamki described as a "destination of choice" for Adnoc Distribution. The Abu Dhabi company is also not deterred by the size of a potential deal as long as it "moves the needle" for the company and is value-accretive, he told The National on Tuesday.
Adnoc Distribution remains in a constant "state of growth", expanding organically and inorganically, he added. "We always look at opportunities. We are not short of bandwidth to look at them [and] we are not short of a financial capability to fund them."
However, despite financing muscle, the company remains disciplined in its investment approach.
South Africa represents the fourth country where Adnoc Distribution would operate. It follows its acquisition of a 50 per cent stake in TotalEnergies Marketing Egypt in 2023 and the 2018 launch of its retail fuel stations in Saudi Arabia.
The company plans to fund the South African move through project finance and will ensure the funds are in place before the closure of the deal.
The strength of Adnoc Distribution's balance sheet means securing financing for the deal or future acquisitions is not an issue for the company, Mr Al Lamki said. "We have a strong balance sheet to start with and we've been able to fund our growth trajectory since inception, whether it's organic growth or inorganic growth," he added.
In terms of funding for deals, the company has a clear strategy and "we will finance [them] in the best way possible to make sure that we maximise our return on the investment", Mr Al Lamki said. "By the time we close this deal, our net debt will be around 1.2 [times of Ebitda], which is still healthy," he said.
Significant impact
The proposed acquisition is expected to be value-accretive to Adnoc Distribution, which expects its earnings per share to rise by 6 per cent in the first full year after completion.
The deal will boost Adnoc Distribution's earnings before interest, taxes, depreciation and amortisation by 13 per cent from 2025 levels, the company said. Net income will jump by 6 per cent during that period, it added.
The South African acquisition will also boost Adnoc Distribution's fuel retailing and convenience stores network. With the addition of South African assets, its total network will expand to 1,600 stations, while its network of convenience outlets will hit 900 stores. It added 22 new service stations in the first quarter of this year.
The company, which sold 15.7 billion litres of fuel in 2025, will receive a boost of 20 per cent to 19.2 billion litres of sale once the deal is finalised, Adnoc Distribution said in an investor presentation.
