Parkland has reached an agreement to be acquired by the American company Sunoco

A portfolio manager at Newhaven Asset Management offers her perspective on Sunoco's $9.1 billion acquisition of Parkland.

A judge has ruled in favor of Parkland Corp., permitting the company to delay its shareholder meeting by more than a month. This extension allows investors to vote not only on the $9.1 billion takeover bid from Dallas-based Sunoco LP but also on the election of a new board of directors. Originally slated for a Tuesday meeting in Calgary, the gathering was meant to address competing nominee slates from Parkland's management and Simpson Oil, which owns nearly 20% of Parkland's shares. The rescheduled meeting will now take place on June 24, where shareholders will also cast their votes on the cash-and-stock merger with Sunoco, a deal that would create the largest independent fuel distributor in the Americas.

Simpson requested an order from the Alberta Court of King's Bench to maintain the original meeting date, criticizing Parkland's decision as "deplorable" and a maneuver to "cling to power." Justice Douglas Mah indicated on Monday that reinstating the meeting would be "impractical and confusing" for both shareholders and the market. He emphasized that Simpson would have adequate opportunity to voice its opinions, and that shareholders need comprehensive information about the Sunoco deal prior to their vote. In a statement, Cayman Islands-based Simpson condemned Parkland for the postponement and called for the resignation of 11 current Parkland directors, including Executive Chair Mike Jennings. "Delaying the meeting and advancing any transaction before a board transition is a blatant violation of fiduciary duty—a clear attempt to retain power and circumvent shareholders' wishes," said Simpson. The acquisition requires approval from both shareholders and regulatory agencies, and must comply with the Investment Canada Act. Sunoco has committed to maintaining its Canadian headquarters in Calgary, preserving significant employment in Canada, and investing in Parkland's refinery located in Burnaby, B.C. Parkland operates several gas station brands, including Ultramar, Chevron, and Pioneer, across 26 countries. In 2009, Sunoco stations in Canada were rebranded as Petro-Canada. "This partnership with Sunoco provides Parkland's shareholders with the highest value and substantial returns, reaffirming both companies' dedication to Canada, a nation integral to our shared history," stated Parkland CEO Bob Espey, who plans to resign by the end of the year. During a conference call, an analyst raised concerns about potential objections from major Parkland shareholders, without specifically naming Simpson. "For Parkland shareholders, this offer represents an attractive premium, considerable cash, and a stronger business foundation moving forward," Kim replied. "We believe this is an offer that investors will find hard to resist." Analysts suggest that a better offer is unlikely to materialize. "If this deal is rejected, the possibility of selling the company in pieces may arise, as there is doubt about interest in Parkland's entire asset portfolio," TD Cowen analysts remarked in a report. ATB Financial noted, "With appropriate return compensation, a $275 million break fee, and this strategic merger poised to create a leader in global fuel distribution, we expect shareholders will support this transaction." Parkland and Simpson have experienced ongoing friction concerning the performance and governance of the fuel retailer and refiner for at least a year.

Under shareholder pressure, Parkland announced in March its intention to explore options to boost its share price, including a potential sale of the entire company, which it had previously dismissed. Simpson has criticized Parkland for refusing a possible acquisition at a "material premium" in 2023, reportedly an offer from Sunoco valued at $45 per share. Sunoco intends to form a new publicly traded entity called SUNCorp LLC, which will hold limited partnership units equivalent to Sunoco's publicly traded common units. Parkland shareholders will receive 0.295 units of SUNCorp and C$19.80 for each Parkland share. Additionally, shareholders may choose to receive C$44 per share in cash or 0.536 units of SUNCorp for each Parkland share. The agreement also entails Sunoco assuming Parkland's debt. On Monday, Parkland's stock rose over 5.5%, closing at C$38.28. In early 2019, Parkland finalized a deal to acquire a 75% stake in Simpson's subsidiary Sol, the leading independent fuel marketer in the Caribbean, for $1.6 billion. Sol later obtained a 10% stake in Parkland. Parkland achieved full ownership of Sol in 2022, while Simpson increased its stake. Kyffin Simpson, the founder of Simpson, lauded Parkland and Espey in August 2022, expressing confidence in their management and future prospects. Three years later, Simpson has claimed on its Refuel Parkland website that the characteristics that initially attracted them to the partnership have been "mismanaged out of existence." This report was first published by The Canadian Press on May 5, 2025. *Lauren Krugel, The Canadian Press*