UAE fuel retailer ADNOC Distribution has officially reached a strategic agreement to acquire Shell's downstream business unit in South Africa. The transaction value is estimated at US$ 1 billion, making it ADNOC's largest international expansion step to date.
This corporate move includes the takeover of Shell Downstream South Africa (SDSA), which encompasses a network of 580 service stations, wholesale sector, aviation fuel business, and lubricant operations. With this integration, ADNOC Distribution's operational network will jump by 55 percent to a total of 1,600 locations, while boosting global fuel sales volume by up to 20 percent.
South Africa becomes the fourth country in ADNOC Distribution's business footprint, joining the United Arab Emirates, Saudi Arabia, and Egypt. Bader Saeed Al Lamki, CEO of ADNOC Distribution, emphasized that the company continues to pursue aggressive growth ambitions by targeting other potential markets in Africa and Southeast Asia.
To comply with South Africa's Broad-Based Black Economic Empowerment regulations, ADNOC will hold a 72 percent stake, while the remaining 28 percent will be allocated to a local partner and an employee share option scheme. Despite the change in ownership, ADNOC has decided to retain the Shell brand on service stations and lubricant products through a long-term licensing agreement to maintain customer loyalty built over more than a century.
Financially, ADNOC Distribution management projects that this acquisition will make a positive contribution to the company's performance, including potential net profit growth and enhanced dividend payouts for shareholders in the coming years.
