Adds details on proxy fight, other background.
US infrastructure operator and fuel distributor Sunoco said it will buy Canadian refiner and fuel retailer Parkland in a $9.1bn cash and stock deal.
The deal comes as Parkland faces a proxy fight from its largest shareholder Simpson Oil, which was calling for a vote to change the board of directors at a now-cancelled 6 May shareholder meeting.
The agreement with Sunoco "creates significant financial benefits for shareholders and would position the combined company as the largest independent fuel distributor in the Americas," said Michael Jennings, executive chairman of Parkland.
The transaction will further diversify Sunoco's portfolio and geographic footprint and increase cash flow generation for reinvestment and distribution growth, Sunoco and Parkland said.
Parkland owns about 4,000 retail and commercial locations in Canada, the US and the Caribbean region, as well as the 55,000 b/d refinery in Burnaby, British Columbia. The refinery produces conventional oil products and has 4,000 b/d of co-processing capacity, meaning both petroleum and biogenic feedstocks are used.
Sunoco said it is committed to continue investment in the refinery which supplies fuel to southwestern BC, including the Vancouver area.
Under the deal, Sunoco will keep a Canadian headquarters in Calgary and "significant employment levels" in Canada, the companies said.
The transaction is expected to close in the second half of the year. Sunoco is part of the Dallas-based Energy Transfer family of companies but is publicly traded under its own ticker symbol.
Parkland has planned a special meeting of its shareholders on 24 June, to approve the transaction. The annual general meeting of Parkland shareholders, which was originally scheduled for 6 May has been cancelled.
Proxy fight building before deal
Parkland in March said it was conducting a review of strategic alternatives including a possible sale of the company. The review was led by a special committee of the board of directors.
Parkland long-time chief executive Bob Espey announced on 16 April that he would step down sometime this year with the timing depending on the completion of the strategic review or the appointment of a new chief executive.
Simpson Oil, which holds about 20pc of Parkland shares, called for a strategic review of Parkland in 2024 and re-iterated its concerns in a letter to the Parkland board of directors in February. Parkland and Simpson Oil have been mired in a dispute related to a 2019 governance agreement.
Simpson Oil said on 2 May that it had the support of more than 60pc of Parkland's shareholders which would enable it to take control of the Parkland board of directors. An official vote would have taken place at the now-cancelled shareholders meeting.
Simpson Oil on Monday urged Parkland to "respect the democratic process" and allow the 6 May shareholders meeting to proceed as scheduled.
"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 Oil said in a press release.
Simpson Oil also called for all 11 incumbent directors to resign immediately.
In 2023, activist investor hedge fund Engine Capital said that Parkland should consider shedding assets "that create unnecessary complexity and detract from its underlying value."
Engine Capital said at the time that the Burnaby refinery is a "volatile and more capital-intensive refinery" that should be sold or spun off.
Parkland last year sold its Canadian commercial propane business to Avenir Energy for C$115mn.
Sunoco, meanwhile, has been growing its footprint in North America. The company [last year acquired] (https://direct.argusmedia.com/newsandanalysis/article/2530270) pipeline and terminal operator NuStar Energy for $7.3bn.
