Abu Dhabi National Oil Co. Eyes UGI’s Propane Distribution Unit in Major Diversification Push
A unit of Abu Dhabi National Oil Co. is currently exploring a potential investment in UGI Corp.’s propane distribution unit AmeriGas, according to sources familiar with the situation. The state-owned Adnoc is in talks with advisors regarding the possibility of valuing the company at several billion US dollars and purchasing a stake in AmeriGas through its listed retail arm, Adnoc Distribution. This would be Adnoc’s first major acquisition in the US as they seek to diversify their operations beyond crude oil.
While discussions are still ongoing, there is no guarantee that a deal will be reached, according to the sources. UGI has not responded to requests for comment, while Adnoc declined to comment on the matter. Following reports of Adnoc’s interest in a potential deal, UGI’s stock saw a significant increase of 6.4% in New York trading. In 2019, UGI agreed to acquire the remaining shares of AmeriGas for $2.4 billion, valuing the propane distributor at approximately $3.3 billion. Like other Middle Eastern companies, Adnoc is looking to expand its operations amidst expectations of declining crude oil demand in the energy transition phase. Alongside potential investments in AmeriGas, Adnoc has also been in talks with German chemical company Covestro AG. UGI operates in natural gas distribution and electric utilities, with an international presence in propane distribution in Europe, in addition to its propane distribution business.
