Adnoc Distribution to acquire Shell South Africa’s downstream business

One new country, 580 new stations: Adnoc Distribution signed a definitive agreement to fully acquire Shell Downstream South Africa (SDSA) in a transaction valued at around USD 1 bn before debt and working capital adjustments, according to a press release (pdf). The acquisition includes 580 fuel stations, wholesale fuels, aviation, lubricants businesses, and is expected to close in 2027.

The details: Adnoc plans to sell a 28% stake in SDSA to a local empowerment partner and an employee stock ownership plan after closing to comply with South Africa’s Broad-Based Black Economic Empowerment. It will retain the Shell brand for the retail and lubricants businesses under a long-term licensing agreement.

The numbers: The transaction would expand Adnoc’s global network by 55% to nearly 1.6k service stations, increase convenience stores by 70% to around 900, and lift annual fuel volumes by around 20% to 19.2 bn liters. Adnoc expects the acquisition to increase earnings per share by some 6% in the first full year after closing.

Why South Africa? It’s one of the few fuel retail markets with regulated pricing designed to protect retailers’ margins from inflation, exchange-rate volatility, and swings in global oil prices. The framework provides greater earnings visibility than many deregulated markets, according to an investor presentation (pdf).

BACKGROUND- The acquisition expands Adnoc Distribution’s African footprint and makes South Africa its fourth retail market after the UAE, its 2018 entry to Saudi Arabia, and 2023 entry to Egypt after the acquisition of a 50% stake in TotalEnergies Marketing Egypt.