Adnoc Distribution has agreed to acquire Shell Downstream South Africa (SDSA) in a deal valued at approximately $1 billion (Dh3.67 billion), marking one of the company’s largest international investments as it expands its presence across key energy markets.
The Abu Dhabi-based fuel retailer announced on Tuesday that it will purchase the business from Shell South Africa Holdings, with the transaction expected to close in 2027, subject to regulatory approvals and customary closing conditions. The stated enterprise value is before adjustments for net debt and working capital.
The acquisition includes SDSA’s network of about 580 company-owned and dealer-operated service stations, as well as its wholesale fuel distribution, aviation fuel and lubricants businesses.
Following completion of the transaction, Adnoc Distribution plans to sell a 28% stake in the South African business to a local empowerment partner and an Employee Stock Option Plan (ESOP). The company said this approach is intended to align with South Africa’s Broad-Based Black Economic Empowerment (B-BBEE) framework while promoting local participation, job creation and energy security.
Customers are expected to see little immediate change at fuel stations, as Adnoc Distribution will enter into a long-term licensing agreement allowing the continued use of the Shell brand for retail service stations and lubricants operations across South Africa.
Chief Executive Officer Eng. Bader Saeed Al Lamki described the acquisition as a major step in the company’s international expansion strategy.
He said the investment reflects Adnoc Distribution’s confidence in South Africa’s fuel retail market, describing it as a well-regulated sector with strong long-term growth potential. According to Al Lamki, the transaction will help diversify the company’s international portfolio while creating sustainable value for shareholders, partners and customers.
Adnoc Distribution said South Africa offers attractive market fundamentals, supported by continued investment in transport infrastructure and a growing driving-age population that is expected to sustain demand for fuel products over the coming years.
The company also highlighted the country’s regulatory environment, noting that fuel pricing mechanisms are designed to provide greater protection against inflation and currency fluctuations, supporting stable margins and long-term cash generation.
Financially, Adnoc Distribution expects the acquisition to enhance shareholder returns. The company forecasts that the transaction will increase earnings per share by around 6% during the first full year after completion. It also expects the investment to generate an internal rate of return above the company’s target threshold for fuel and convenience retail operations.
The acquisition will expand Adnoc Distribution’s international footprint to four countries. The company entered the Saudi Arabian market in 2018 with the launch of its retail fuel station network and strengthened its regional presence in 2023 through the acquisition of a 50% stake in TotalEnergies Marketing Egypt.
The latest deal underscores Adnoc Distribution’s strategy of pursuing growth beyond the United Arab Emirates while investing in established fuel retail businesses with opportunities for long-term expansion.
