Adnoc Distribution buys Shell's South Africa downstream business in $1 bln deal

07/07/2026 05:33 AST

Adnoc Distribution has fully acquired Shell Downstream South Africa (SDSA) from Shell South Africa Holdings with an implied enterprise value of approximately $1 billion (Dh3.67 billion), the company announced on Tuesday.

The transaction covers SDSA's 580 company and dealer-owned fuel stations along with its wholesale fuel, aviation and lubricants businesses. The enterprise value is prior to adjustment for net debt and working capital, and the deal is expected to close in 2027, subject to customary regulatory conditions and other closing conditions.

Following completion, a 28 per cent stake in SDSA is expected to be sold on to a local empowerment partner and an Employee Stock Option Plan (ESOP).

Adnoc Distribution will also enter into a long-term brand licensing agreement upon completion to retain the Shell brand for retail service stations and lubricants operations in South Africa, meaning customers will continue to receive their existing experience under the company's stewardship.

The company said it will seek to appoint a local partner with a deep understanding of the South African sector, its regulatory environment and operating requirements, including alignment with the country's Broad-Based Black Economic Empowerment (B-BBEE) legislation, with a focus on energy security, job creation and inclusive economic participation.

Confidence in South African market
Eng. Bader Saeed Al Lamki, CEO of Adnoc Distribution, said the deal marked a significant milestone in the company's international growth strategy and reflected its confidence in South Africa as "a high-potential, well-regulated fuel retail sector."

He said the acquisition is intended to accelerate the company's international expansion, diversify its platform and "create sustainable long-term value for our shareholders, our partners and the customers and communities that this business has proudly served for decades."

Transaction rationale
Adnoc Distribution said the South African fuel retail sector offers attractive fundamentals, pointing to the country's investments in critical transport infrastructure and its growing driving-age population as reinforcing fuel consumption growth potential. The company also cited South Africa's transparent regulatory framework, with pricing structures designed to insulate margins against inflation and currency volatility, as supporting sustainable growth and cash generation.

The deal is projected to be value-accretive, boosting Adnoc Distribution's earnings per share by 6 per cent in the first full year after completion, with an internal rate of return expected to exceed the company's hurdle rate for its fuel and convenience retail business.

South Africa represents the fourth country in which Adnoc Distribution would operate, following its 2023 acquisition of a 50 per cent stake in TotalEnergies Marketing Egypt and the 2018 launch of its retail fuel stations in Saudi Arabia.

Khaleej Times