Sunoco will buy Canada-based Parkland in a deal valued at about $9.1bn (R166.46bn), including debt, the US fuel supplier said on Monday, a move that would create the largest independent fuel distributor in the Americas.
Parkland management hailed the deal as a path to greater financial stability and growth. The company had undertaken a strategic review in March after persistent pressure from Simpson Oil, its largest shareholder with a nearly 20% stake, and activist investor Engine Capital.
Simpson expressed its displeasure with the deal on Monday, a sign internal turmoil at the Canadian company is not over.
Under terms of the deal, each Parkland share will be exchanged for C$19.80 (R261,86) in cash and 0.295 Sunoco unit, a 25% premium over the seven-day volume-weighted average price.
Parkland cancelled its May 6 annual general meeting and instead scheduled a special meeting for June 24 at which Parkland shareholders will vote on the Sunoco transaction.
In a statement on Monday, Simpson Oil, which had been trying to wrest control of the company's board by proposing its own proxy slate of board candidates, said it has applied for a court injunction to force Parkland to hold the annual general meeting on May 6 as initially planned.
Simpson said Parkland's board is pushing ahead with the deal despite losing shareholders' confidence, calling it a "last-ditch attempt" by the company to retain control.
Shares of Sunoco, which operates in wholesale fuel distribution and retail convenience, were down 5.6% at midday while those of Parkland were up 6.3%.
The acquisition marks the company's second major deal in recent years. In 2024, Sunoco acquired fuel storage and pipeline operator NuStar Energy for $7.3bn (R133,488,521,240).
The Parkland deal is expected to close in the second half of the year and deliver more than $250m (R4.57bn) in annual cost savings by the third year.
Sunoco said the transaction will boost cash flow by more than 10% and allow the combined company to return to its target debt levels within 12 to 18 months of closing.
To fund the cash portion, Sunoco has secured a $2.65bn (R48.45bn), 364-day bridge loan, a short-term facility often used to bridge financing gaps in large deals.
On a call with analysts, executives said the companies will distribute more than 15-billion gallons of fuel annually and strengthen their position across wholesale and retail markets.
Sunoco will keep investing in Parkland's Burnaby Refinery, which makes cleaner, low-carbon fuels, and run it for the long term to supply fuel to the Lower Mainland region in Canada.
Sunoco to buy rival Parkland in $9bn deal
Image: Bruce Bennett/Getty Images
Sunoco will buy Canada-based Parkland in a deal valued at about $9.1bn (R166.46bn), including debt, the US fuel supplier said on Monday, a move that would create the largest independent fuel distributor in the Americas.
Parkland management hailed the deal as a path to greater financial stability and growth. The company had undertaken a strategic review in March after persistent pressure from Simpson Oil, its largest shareholder with a nearly 20% stake, and activist investor Engine Capital.
Simpson expressed its displeasure with the deal on Monday, a sign internal turmoil at the Canadian company is not over.
Under terms of the deal, each Parkland share will be exchanged for C$19.80 (R261,86) in cash and 0.295 Sunoco unit, a 25% premium over the seven-day volume-weighted average price.
Parkland cancelled its May 6 annual general meeting and instead scheduled a special meeting for June 24 at which Parkland shareholders will vote on the Sunoco transaction.
In a statement on Monday, Simpson Oil, which had been trying to wrest control of the company's board by proposing its own proxy slate of board candidates, said it has applied for a court injunction to force Parkland to hold the annual general meeting on May 6 as initially planned.
Simpson said Parkland's board is pushing ahead with the deal despite losing shareholders' confidence, calling it a "last-ditch attempt" by the company to retain control.
Shares of Sunoco, which operates in wholesale fuel distribution and retail convenience, were down 5.6% at midday while those of Parkland were up 6.3%.
The acquisition marks the company's second major deal in recent years. In 2024, Sunoco acquired fuel storage and pipeline operator NuStar Energy for $7.3bn (R133,488,521,240).
The Parkland deal is expected to close in the second half of the year and deliver more than $250m (R4.57bn) in annual cost savings by the third year.
Sunoco said the transaction will boost cash flow by more than 10% and allow the combined company to return to its target debt levels within 12 to 18 months of closing.
To fund the cash portion, Sunoco has secured a $2.65bn (R48.45bn), 364-day bridge loan, a short-term facility often used to bridge financing gaps in large deals.
On a call with analysts, executives said the companies will distribute more than 15-billion gallons of fuel annually and strengthen their position across wholesale and retail markets.
Sunoco will keep investing in Parkland's Burnaby Refinery, which makes cleaner, low-carbon fuels, and run it for the long term to supply fuel to the Lower Mainland region in Canada.
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