Sunoco to Acquire Parkland Corporation in $9.1B Deal
U.S.-based Sunoco LP has announced a $9.1-billion agreement to acquire Canadian fuel retailer Parkland Corporation marking one of the largest cross-border energy deals in recent years. The agreement, which includes the assumption of debt, follows months of internal conflict at Parkland and may reshape the North American fuel distribution landscape.
Advertisement
Deal Details
The friendly takeover will see Parkland shareholders receive $19.80 in cash and 0.295 units of SUNCorp, a new subsidiary of Sunoco, for each share held. The offer represents a 25% premium over recent share averages. Parkland shareholders will also have the option to choose all-cash or all-stock alternatives, subject to proration.
Parkland, based in Calgary, owns more than 4,000 gas stations under brands such as Esso, Pioneer, and Ultramar, as well as the On the Run convenience store chain. The company also operates a key refinery in Burnaby, British Columbia, supplying fuel to Western Canada.
Strategic and Political Implications
Sunoco, which operates 7,400 retail sites and maintains 14,000 miles of fuel pipelines in the U.S., said the acquisition will increase its distributable cash flow and generate US$250 million in cost savings within three years.
To help secure the deal, Sunoco pledged to:
- Retain Parkland’s Calgary head office
- Safeguard Canadian jobs
- Continue investing in the Burnaby refinery
The acquisition still requires regulatory approval, including under the Investment Canada Act, and comes at a time of strained U.S.-Canada relations, particularly around trade. Ottawa has recently signaled heightened scrutiny of foreign takeovers it considers predatory.
Shareholder Pressure and Boardroom Conflict
The takeover offer comes amid growing unrest from Parkland’s largest shareholder, Simpson Oil Ltd., which owns nearly 20% of the company. Simpson had nominated nine new board directors, citing concerns about corporate governance and underperformance.
The original Parkland annual meeting scheduled for May 6 was postponed to June 24, when shareholders will now also vote on the proposed acquisition.
Advertisement
Simpson Oil has since called for the meeting to proceed on its original date, pushing back against the timeline change.
Earlier this year, Parkland launched a strategic review, which included considering a full sale of the company. CEO Bob Espey also announced plans to step down before year-end.
What do you think this deal means for Canadian energy independence and foreign ownership of key infrastructure?
More…
- https://www.theglobeandmail.com/business/article-sunoco-parkland-proposed-sale
- https://www.ctvnews.ca/business/article/sunoco-signs-deal-to-buy-parkland-in-agreement-valued-at-us91b
- https://www.newswire.ca/news-releases/sunoco-lp-to-acquire-parkland-corporation-in-transaction-valued-at-9-1-billion-833220845.html
Advertisement
