According to sources familiar with the situation, Abu Dhabi National Oil Co. (Adnoc) is currently exploring a potential investment in UGI Corp.’s propane distribution unit AmeriGas. The state-owned Adnoc is in talks with advisors regarding the possibility of purchasing a stake in AmeriGas, valuing the company at several billion US dollars. If Adnoc chooses to move forward with the transaction, this would be their 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. Adnoc declined to comment on the matter, and UGI has not responded to requests for comment. Following reports of Adnoc’s interest in a potential deal, UGI’s stock saw a significant increase of 6.4% in New York trading. The company, 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.
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 its propane distribution business but also natural gas distribution and electric utilities businesses with an international presence in propane distribution in Europe
