ADNOC Distribution to buy Shell South Africa downstream business in $1 billion deal

By Yousef Saba

ADNOC Distribution ADX:ADNOCDIST said on Tuesday it had agreed to buy Shell's LSE:SHEL downstream business in South Africa for an implied enterprise value of about $1 billion, marking its largest overseas acquisition yet as it expands beyond the Gulf.

The acquisition of Shell Downstream South Africa, which includes 580 fuel stations as well as wholesale fuel, aviation and lubricants operations, would expand ADNOC Distribution's network by 55% to about 1,600 sites and increase fuel volumes by 20%.

South Africa would become ADNOC Distribution's fourth market after the United Arab Emirates, Saudi Arabia and Egypt, and is a step towards its ambitions to become a global fuel retail and convenience operator.

ADNOC Distribution's CEO Bader Saeed Al Lamki said the company was "still hungry for growth", adding that Africa and Southeast Asia are among its target regions.

The company expects the deal to increase earnings per share by 6% and earnings before interest, taxes, depreciation and amortisation by around 13% in the first full year after closing.

The deal could lead to higher payouts for shareholders, Al Lamki said. ADNOC Distribution's dividend policy through 2030 guarantees a minimum of $700 million a year, or 75% of net income if that is higher.

SOUTH AFRICA CONSOLIDATING

ADNOC Distribution enters a South African fuel retail market that has consolidated rapidly around commodities-trader-backed owners. Vitol's Vivo Energy became market leader after buying a majoirty of Engen from Malaysia's Petronas in 2024, while Glencore has run the country's second-biggest network since backing the acquisition of Chevron's Caltex stations in 2018.

A 28% stake in SDSA will be sold to a local partner and an employee stock-option plan after closing, in line with South Africa's Broad-Based Black Economic Empowerment legislation, leaving ADNOC Distribution with a 72% majority, it said. SDSA had fuel volumes of about 3.5 billion litres and operated 360 convenience stores as of 2025.

ADNOC Distribution said South Africa's regulated fuel pricing framework offers gross margins per litre comparable to the UAE, insulating returns from inflation and currency volatility.

Before the U.S.-Israeli war with Iran, about 60% of the country's refined product demand was met by imports, largely from the Gulf.

"We are, first and foremost, a convenience and retail company," Al Lamki said when asked if his company would invest in refining, adding it would focus on the retail network, convenience stores, aviation, B2B and lubricants.

ADNOC Distribution will retain the Shell brand for the retail service stations and lubricants business under a long-term licensing agreement.

"Shell has been in South Africa for more than 120 years. Customers are used to it," Al Lamki said. "We believe there's value in retaining this brand."