ADNOC Distribution to acquire Shell Downstream South Africa in $1 billion deal

Abu Dhabi: ADNOC Distribution plans to acquire Shell Downstream South Africa in a deal with an implied enterprise value of about $1 billion, giving the UAE fuel retailer one of South Africa’s largest service station networks and a bigger platform for growth across Africa.

The proposed acquisition covers Shell’s downstream retail, wholesale, aviation and lubricants businesses in South Africa. It includes 580 company-owned and dealer-operated service stations, making it the third-largest fuel retail network in the country by number of service stations, along with 360 convenience stores.

The transaction is expected to close in 2027, subject to customary regulatory approvals. Once completed, South Africa will become ADNOC Distribution’s fourth operating market after the UAE, Saudi Arabia and Egypt.

ADNOC Distribution Chief Executive Officer Eng. Bader Saeed Al Lamki said during a wire call on Tuesday that the deal marks a new stage in the company’s African expansion.

“We are proud at ADNOC to share this update, which marks an important step in strengthening our fuel retail presence in Africa,” he said. “As a reminder, we've entered the African market from Egypt and from the north, and now we're entering, continue to expand in Africa through the south.”

Customers in South Africa are expected to continue seeing the Shell brand at service stations and across lubricants, with ADNOC Distribution set to enter into a long-term brand licensing agreement after completion.

“Customers will continue to receive their preferred shell trusted experience and other distributions leadership,” Al Lamki stated.

The acquisition gives ADNOC Distribution immediate scale in a market with an established fuel retail sector, an extensive convenience network and commercial fuel supply links to key industries.

Shell Downstream South Africa also operates an aviation fuel business supplying three airports and more than 15 airlines. The company owns and operates six fuel terminals, including a terminal at Island View.

Al Lamki said South Africa offers a strong and transparent regulatory framework, along with “a growing, well-regulated fuel retail sector with strong fundamentals that support sustainable growth.”

The deal also gives ADNOC Distribution exposure to lubricants, wholesale fuel supply and convenience retail, adding revenue streams beyond service station fuel sales.

ADNOC Distribution expects to sell down a 28% stake in the business to a local empowered partner after completion. Al Lamki explained that the planned sell-down echoes the company’s commitment to South Africa’s strategic economic priorities, including energy security, job creation and inclusive economic participation.

The local partnership structure is likely to be closely watched by regulators and investors, given the scale of the assets and the role of fuel supply in the South African economy.

ADNOC Distribution said the acquisition is expected to generate an internal rate of return above its hurdle rate and increase earnings per share by 6% in the first full year after completion.

Al Lamki noted that the deal is expected to deliver immediate shareholder value through higher net profit after completion, with the potential to support higher dividends over time.

“This transaction is an important milestone for our company, marking a major step in our ambition to become a global mobility and convenience retail destination,” he said.

He added that the proposed acquisition strengthens ADNOC Distribution’s international platform, diversifies its portfolio and supports its long-term growth ambitions.

“By bringing SDSC under adverse distributions ownership, we plan to create sustainable long-term value for shareholders, our partners, customers, and community communities alike,” Al Lamki said.

The South Africa deal follows ADNOC Distribution’s earlier expansion into Egypt and comes as the company builds a broader international retail footprint outside its home market.

Al Lamki described Shell Downstream South Africa as a financially strong business and a natural strategic fit for ADNOC Distribution’s portfolio.

The acquisition will also deepen the company’s position in mobility and convenience retail, a segment where fuel retailers are increasingly using forecourts to sell food, beverages, vehicle services and other everyday products to customers.