Canadian fuel company faces $9-billion takeover bid by US-based Sunoco

National Observer

05-05-2025

A judge has sided with Parkland Corp. in its last-minute decision to delay its shareholder meeting by more than a month so investors can vote on a US$9.1-billion takeover by Sunoco LP at the same time they elect a board of directors.
A showdown had been set to take place in Calgary on Tuesday, with shareholders voting on competing nominee slates put forward by Parkland's management and by Simpson Oil, which owns just under 20 per cent of the Canadian fuel retailer and refiner's shares.
But Parkland postponed the meeting to June 24, when shareholders are to also vote on the cash-and-stock deal with Dallas-based Sunoco that would create the largest independent fuel distributor in the Americas.
Simpson applied to the Alberta Court of King's Bench for an order to have the Tuesday meeting go ahead, calling the Parkland move "deplorable" and an attempt to "cling to power."
Justice Douglas Mah says in a decision late Monday that any order to reinstate the meeting would be "impractical and confusing" to shareholders and the market.
Mah says Simpson will have ample opportunity to express its views and that shareholders should have full information about the Sunoco deal before they vote on it.
In a news release earlier Monday, Cayman Islands-based Simpson lambasted Parkland for the vote delay and called on 11 incumbent Parkland directors to resign, including executive chair Mike Jennings.
A judge has sided with Parkland Corp. in its last-minute decision to delay its shareholder meeting by more than a month so investors can vote on a US$9.1-billion takeover by Sunoco LP at the same time they elect a board of directors.
"Delaying the meeting and pushing forward with any transaction ahead of board transition represents a clear breach of fiduciary duty — an obvious attempt to cling to power and sidestep shareholder will," Simpson said in a statement Monday.
The takeover requires shareholder and regulatory approval and also has to be cleared under the Investment Canada Act. The U.S. company has committed to maintain a Canadian headquarters in Calgary, significant employment in Canada and investment in Parkland's refinery in Burnaby, B.C.
Parkland owns the Ultramar, Chevron and Pioneer gas station chains as well as several other brands in 26 countries. Sunoco outlets that had long operated in Canada were rebranded in 2009 under the Petro-Canada banner.
"This combination with Sunoco provides Parkland's shareholders with the highest value and the greatest proceeds, while also affirming Sunoco's and Parkland commitment to Canada, a country that has played a vital role in our combined history," said Parkland chief executive Bob Espey, who announced last month that he would step down before year-end.
On a conference call, an analyst asked Sunoco CEO Joe Kim about potential issues with large Parkland shareholders, but did not name Simpson specifically.
"For the Parkland shareholders, you get a very, very healthy premium, material cash and a stronger company underlying the equity going forward," Kim replied.
"So we think this is an offer that's going to be hard for people to pass up."
Analysts said a better offer is unlikely.
"If this deal is rejected, we may be looking at the company being sold in parts as its unclear who else would be interested in (Parkland's) full mix of assets," analysts with TD Cowen said in a report.
ATB Financial said in a report: "Given the appropriate return compensation, $275-million break fee and strategic combination to create a leader in global fuel distribution, we expect shareholders will support the transaction."
Parkland and Simpson have been at odds over the fuel refiner and retailer's performance and governance for at least a year.
Under shareholder pressure, Parkland said in March it would review options to boost its share price, including a sale of the entire company, after rebuffing such a move.
Simpson has criticized Parkland for rejecting a potential acquisition at a "material premium" in 2023. The Globe and Mail has reported it was from Sunoco and worth $45 a share.
Sunoco intends to form a new publicly traded company named SUNCorp LLC that will hold limited partnership units of Sunoco that are economically equivalent to Sunoco's publicly traded common units.
Parkland shareholders will receive 0.295 SUNCorp units and C$19.80 for each Parkland share. Parkland shareholders can also receive C$44 per Parkland share in cash or 0.536 SUNCorp units for each Parkland share. The deal would also see Sunoco assume Parkland's debt.
Parkland shares rose more than 5.5 per cent to C$38.28 on Monday.
In early 2019, Parkland closed a deal to buy a 75 per cent stake in Simpson subsidiary Sol, the largest independent fuel marketer in the Caribbean, for $1.6 billion. Sol got a 10 per cent stake in Parkland.
Parkland gained full ownership of Sol in 2022 and Simpson doubled its stake.
At the time, the founder of Simpson, Kyffin Simpson, had glowing words for Parkland and Espey.
"We have tremendous confidence in the company, its management team and its bright future,' he said in August 2022.
Three years later, Simpson says on its Refuel Parkland website that the elements that first attracted it to the partnership have been "mismanaged out of existence."