U.S.-based Sunoco inks multi-billion-dollar deal to acquire Parkland Corporation
Title: Sunoco's $9.1B Acquisition of Parkland Corp: A Strategic Move for Market Dominance
Calgary - In a major move, American energy company Sunoco LP has inked a deal to purchase Parkland Corp for a whopping US$9.1 billion, including debt. This strategic acquisition aims to position the combined entity as the largest independent fuel distributor in the Americas.
Parkland, based in Calgary, has been under pressure due to attempts by Simpson Oil Ltd., its largest shareholder, to change a majority of its board of directors. The annual meeting, which was scheduled for Tuesday, has been cancelled and rescheduled for June 24, when shareholders will also vote on the Sunoco deal.
Michael Jennings, Parkland's executive chairman, described the deal as a compelling outcome for shareholders. "The board unanimously recommends the proposed transaction, recognizing Sunoco's commitment to preserving Canadian jobs, keeping the Calgary head office, and further investing in Canada," he said in a statement.
Sunoco and Parkland have had differences related to the fuel refiner and retailer's performance and governance for about a year. Simpson, who owns nearly 20% of Parkland's shares, wanted nine of its directors added to Parkland's board, but these plans have been put on hold.
Under pressure from shareholders, Parkland announced in March that it would explore options to boost its share price, including a possible sale of the entire company. Longtime Parkland CEO Bob Espey announced plans to step down before the end of the year.
The deal entails Sunoco forming a new publicly traded company named SUNCorp LLC that will hold limited partnership units of Sunoco. Parkland shareholders will receive a mix of Sunoco equity and C$19.80 for each Parkland share. They may also opt for C$44 per Parkland share in cash or more Sunoco equity, subject to limits.
Parkland shares closed at C$36.28 on the Toronto Stock Exchange on Friday. The deal is subject to shareholder and court approvals, regulatory approvals, and approval under the Investment Canada Act. Sunoco has committed to maintaining a Canadian headquarters in Calgary and significant employment levels in Canada. It also intends to continue investing in Parkland's refinery in Burnaby, B.C.
This acquisition represents Sunoco's strategic expansion and synergy realization. It positions the combined entity as the largest independent fuel distributor in the Americas, enhancing scale in fuel distribution and retail. Sunoco projects $250 million in run-rate synergies by Year 3, driven by operational efficiencies and shared infrastructure.
The deal brings significant benefits to Parkland's shareholders, offering a 25% premium on their shares. The transaction is expected to deliver 10%+ accretion to distributable cash flow per common unit, benefiting Sunoco’s unitholders. The transaction is expected to close in late 2025, pending necessary approvals.
Companies mentioned: (TSX:PKI)
- The new company, SUNCorp LLC, intends to maintain a Canadian headquarters in Calgary, as committed by Sunoco.
- The acquisition positions the combined entity, consisting of Sunoco and Parkland, as the largest independent fuel distributor in Canada.
- Sunoco hopes to realize synergies of $250 million by the third year, driven by operational efficiencies and shared infrastructure.
- The deal offers a 25% premium on Parkland's shares to its current shareholders, with Sunoco aiming to close the transaction by late 2025.
- The transaction is subject to various approvals, including shareholder, court, regulatory, and Investment Canada Act approvals.
