Dallas-based Sunoco is proposing to buy Calgary’s Parkland in a US$9.1-billion deal that would give the U.S. company control of one of Canada’s largest fuel distributors.
Dallas-based Sunoco is proposing to buy Calgary’s Parkland in a US$9.1-billion deal that would give the U.S. company control of one of Canada’s largest fuel distributors.
Dallas-based Sunoco is proposing to buy Calgary’s Parkland in a US$9.1-billion deal that would give the U.S. company control of one of Canada’s largest fuel distributors.
Parkland owns about 4,000 gas stations under brands like Esso, Fas Gas and Ultramar, and also operates a B.C. oil refinery. More than potentially expanding Sunoco’s already large footprint, the bid extends a boardroom drama and activist investor battle at Parkland that has simmered for more than a year.
Parkland’s largest shareholder is fighting the takeover, saying in a statement on Monday it sought a court order aimed at reversing Parkland’s decision to postpone its upcoming annual general meeting—previously slated for Tuesday—until June 24.
Here’s what you need to know.
The deal: Sunoco is offering $44 per Parkland share, which amounts to a 25 per cent premium on Parkland’s stock price as of Friday.
Alternatively, shareholders could receive 0.536 shares per Parkland share in the proposed new company, called SUNCorp, or receive $19.80 per share and another 0.295 units in SUNCorp.
Sunoco also said it would assume Parkland’s outstanding debt, bringing the total value of the deal to US$9.1 billion. The deal is subject to federal review given its size.
The pushback: Simpson Oil, which owns roughly 20 per cent of the company, has long been at odds with the Calgary fuel distributor over its financial performance. Last month, Cayman Islands-based Simpson proposed to replace nine Parkland board members due to what it called “chronic underperformance.”
On Monday, Simpson claimed Parkland was planning to move ahead with the sale before the appointment of those board members, and therefore without the support of shareholders. Parkland’s decision to postpone its annual general meeting, where shareholders will vote on the proposed acquisition, was an “eleventh-hour manoeuvre” and a “clear breach of fiduciary duty,” Simpson said in a release.
New York hedge fund Engine Capital, which owns a 2.5 per cent stake in Parkland, has also been calling for a board restructuring since March, when the Calgary firm announced a strategic review of its operations, including a possible sale.
The decision: Parkland shareholders will most likely pass judgment on the bid on the revised AGM date of June 24.
It’s not Sunoco’s first shot at acquiring the Canadian firm. The U.S. firm reportedly offered to buy Parkland in 2023 for roughly the same price—$45 per share—but was rejected by Parkland amid its dispute with Engine Capital.
Following Monday’s bid, Parkland leadership was discernibly more receptive. In a release, executive chairman Michael Jennings called the offer a “compelling outcome” for shareholders that is unanimously supported by the company’s board.
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