Adnoc Distribution, Abu Dhabi National Oil Co.'s fuel retail unit, has agreed to acquire Shell Plc's NYSE:SHEL fuel station business in South Africa at a $1 billion enterprise value, giving the state-backed company its first foothold in Africa's biggest economy. The transaction includes 580 retail stations, along with wholesale fuel, aviation and lubricants operations, and is expected to close next year. After completion, Adnoc Distribution plans to sell 28% of the business to a local empowerment partner and for employee stock options.
The deal adds to Adnoc's wider global acquisition push, supported by Abu Dhabi's oil wealth, after the group moved into natural gas assets across the US, Africa and Central Asia and acquired German chemical firm Covestro AG. Adnoc Distribution is expected to keep using the Shell brand for the South African retail stations and lubricants through a long-term licensing agreement. CEO Bader Al Lamki said the company had studied the deal for nearly two years and viewed it as a transaction that could help accelerate dividend payouts to shareholders.
For investors, the acquisition may be important because Adnoc Distribution expects the deal to increase earnings per share by 6% in the first full year after completion. For Shell, the sale appears to support its plan to exit non-core assets while focusing on long-term oil and gas production. The transaction could also further reshape South Africa's retail fuel market, following Glencore Plc's 2018 acquisition of Chevron Corp.'s Caltex-branded stations, Vivo Energy's purchase of Engen Ltd. last year, and Shell's sale of South Africa's largest refinery to the state-owned Central Energy Fund.