In recent news, Adnoc, the state-owned oil company of Abu Dhabi, is considering making an investment in UGI Corp.’s propane distribution unit AmeriGas. Sources close to the situation have reported that Adnoc is in talks with advisors about a potential purchase of a stake in AmeriGas, valuing the company at several billion US dollars. While discussions are ongoing, there is no guarantee that a deal will be reached.
UGI, headquartered in King of Prussia, Pennsylvania, had previously announced in August that it was exploring strategic alternatives with the assistance of Goldman Sachs Group Inc. and JPMorgan Chase & Co., focusing on its liquefied petroleum gas business. 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 not only in propane distribution but also natural gas distribution and electric utilities, with an international presence in propane distribution in Europe. If Adnoc chooses to move forward with the transaction and makes an investment through their listed retail arm Adnoc Distribution