A unit of Abu Dhabi National Oil Co. (Adnoc) is currently exploring a potential investment in UGI Corp.’s propane distribution unit, AmeriGas, according to sources familiar with the situation. Adnoc is in talks with advisors regarding the potential purchase of a stake in AmeriGas, with the possibility of valuing the company at several billion US dollars. If they choose to move forward with the transaction, 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. 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 are looking to expand their 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 and has an international presence in propane distribution Europe as well.