The past two months have been transformative for Parkland Corp., as on May 5, the company announced that it would be acquired by Sunoco for a staggering $9.1 billion. In order for the transaction to be approved, however, more than 66% of shareholders will need to vote in favor of the transaction.
Parkland’s annual meeting of the shareholders takes place on Tuesday, June 24. The company has issued several statements throughout the month reassuring shareholders that the sale is its best option going forward.
“This strategic combination is a compelling outcome for Parkland shareholders,” said Michael Jennings on May 5, executive chairman of Parkland. “The board unanimously recommends the proposed transaction, recognizing Sunoco’s commitment to safeguarding Canadian jobs, retaining the Calgary head office and further investing in Canada. This partnership creates significant financial benefits for shareholders and would position the combined company as the largest independent fuel distributor in the Americas.”
On June 16, Parkland released a statement reporting that leading independent proxy advisory firms Institutional Shareholder Services (ISS) and Glass, Lewis & Co. (Glass Lewis) recommended that shareholders vote for the proposed arrangement with Sunoco.
ISS noted that “when viewed in proper context, there are compelling reasons to believe that this deal is the best path forward for shareholders.” Among the reasons cited were the offer premium, flexible consideration, the absence of competing proposals, support from Parkland’s largest shareholder and the opportunity for shareholders to participate in future upside potential of the combined entity.
The deal, should it be approved Tuesday, is set to create one of the largest independent fuel distributors in the Americas.
“This transaction delivers immediate value for shareholders, including an attractive 25% premium. Sunoco shares our commitment to growth, customer service, operational excellence, and ongoing investment in Canada, making our combined business stronger and better positioned for sustained success,” said Bob Espey last month, president and CEO of Parkland.
As part of the deal, Sunoco will maintain a Canadian headquarters in Calgary, in addition to “significant employment levels in Canada,” according to a statement.
“The transaction leverages the complementary strengths of both companies to create a more diversified portfolio spanning Canada, the U.S., and the Caribbean, reducing single-industry exposure while improving earnings resiliency and minimizing volatility,” it continued.
The combined company is expected to achieve $250 million in annual run-in synergies by the third year.
The acquisition comes following Parkland’s previously-announced strategic review, launched in March, which was designed to “identify opportunities to maximize value for shareholders,” which included considering a potential sale, the company noted at the time.
In the midst of its strategic review, Parkland was also dealing with dissension from its leading shareholder, Simpson Oil, which called for, and was ultimately granted, the removal of CEO Bob Espey. Simpson also nominated nine independent directors to the board in an attempt to reconfigure the leadership of the company.
Additionally, in September 2024, Parkland announced the divestment of its Florida business, which included the sale of 100 c-stores.
Stay tuned for updates from CStore Decisions.
