Engine Capital pushes Sunoco to increase $7.7-billion takeover bid for Parkland
Hedge fund Engine Capital LP is pushing Sunoco LP SUN-N to boost its $7.7-billion friendly takeover bid for gas station owner Parkland Corp. PKI-T
On Friday, New York-based Engine Capital said it plans to oppose Sunoco's offer for Parkland at a shareholder vote scheduled for June 24. Engine Capital owns 2.5 per cent of Calgary-based Parkland and has been campaigning for the company's sale.
Parkland owns more than 4,000 outlets, including the On the Run convenience store chain, and a Burnaby, B.C., oil refinery supplying fuel to the Lower Mainland.
In early May, Sunoco offered $44 per Parkland share in a combination of its own shares and cash in a transaction that would create one of North America's largest gas station and convenience store operators.
Andrew Willis: Sunoco's bid for gas station operator Parkland fits Trump's MAGA agenda
On Friday, Engine Capital said in a press release the Sunoco offer 'materially undervalues Parkland.'
'To be clear, our opposition to this transaction is directed at its terms – not at Sunoco or its management team,' said Engine Capital managing partner Arnaud Ajdler and partner Brad Favreau. 'We have great respect for both and would welcome the opportunity to become long-term investors in Sunoco if the transaction terms more accurately reflected Parkland's intrinsic value.'
Parkland announced the takeover after facing an activist campaign from its largest shareholder, Simpson Oil Ltd., aimed at replacing the board. Engine Capital said: 'The sale process conducted by the board was expedited and flawed.'
Simpson Oil owns 19.8 per cent of Parkland and wanted to install new leadership at the company. The company has not commented on Sunoco's bid.
In 2023, Sunoco offered to buy Parkland for $18 per share and 0.443 Sunoco units, according to Engine Capital. Parkland's board turned down the offer. The fund manager said the previous bid would now value Parkland at $50.70 per share.
'We believe the 2023 Sunoco proposal – while still undervaluing Parkland – would better reflect the intrinsic value of the company,' Engine Capital said.
Parkland and Sunoco structured the takeover with a wrinkle meant to allow the deal to close, even if Engine Capital and Simpson Oil vote against the transaction.
The acquisition is structured as a plan of arrangement, requiring approval from 66.6 per cent of votes cast by Parkland shareholders. However, Sunoco negotiated the right to switch the offer into a takeover bid, which only needs support from 50 per cent of all outstanding Parkland shares, at any time up until the June 24 meeting.
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