Calgary-based fuel retailer Parkland Corp. PKI-T rebuffed a takeover offer worth nearly $8-billion from Texas-based Sunoco LP SUN-N last year.
The proposal for a stock-based transaction was made in the summer of 2023 for $45 a share, according to a source familiar with the matter. That represented a roughly 28-per-cent premium to where Parkland shares were trading at the time and valued the Canadian company at about $7.9-billion. The Globe and Mail is not identifying the source because they were not authorized to discuss the bid publicly.
Parkland spokesperson Simon Scott said the company has a policy of not commenting on market speculation. The company disclosed this year that it received an offer in 2023, but provided no details on the bid’s size or source, only that Parkland thought it undervalued the company.
Sunoco, which is controlled by billionaire Kelcy Warren, did not respond to multiple requests for comment.
Parkland owns more than 4,000 gas stations and electric-vehicle charging terminals across Canada, the United States and the Caribbean, along with On the Run convenience stores.
Around the time Sunoco proposed the deal, Parkland was fighting an activist investor campaign from New York-based hedge fund Engine Capital LP. Engine owns roughly 2.5 per cent of Parkland and has been urging the company to cut costs and sell non-core assets such as its refinery in Burnaby, B.C. After Engine called for more cost-cutting, Parkland reaffirmed a previously set target of selling $500-million in assets by the end of 2025, but declined to put the Burnaby refinery up for sale.
A disagreement was also brewing in mid-2023 between Parkland and its single largest shareholder, Simpson Oil Ltd., a family-owned business based in the Cayman Islands with a nearly 20-per-cent ownership stake in the gas-station owner.
Parkland acquired most of its Caribbean presence from Simpson when it purchased the SOL refuelling chain in two transactions worth a combined $2.35-billion in 2018 and 2022. Simpson obtained its ownership stake in Parkland through those transactions.
The conflict boiled over near the end of last year when two Simpson-appointed Parkland directors resigned after just seven months on the board.
Michael Christiansen and Marc Halley left after Parkland refused to name one of them as the company’s chair, sources said at the time. The Globe and Mail agreed not to identify the sources because they were not authorized to speak on board governance.
In a Jan. 2 note to clients, TD Cowen analyst Michael Van Aelst said “there were disagreements on changes to board composition and frustrations over the speed at which they were occurring.”
Simpson Oil has since declared its governance and board nomination agreements with Parkland to be invalid. According to Bank of Nova Scotia analyst Ben Isaacson, those agreements prevented Simpson Oil from engaging in any activism against Parkland or soliciting bids to acquire the company. Exiting those agreements would allow Simpson Oil “to have a more active voice” in Parkland’s corporate strategy, Mr. Isaacson said in a note to clients this month. Parkland, however, has said the governance agreement still applies and the company will continue to enforce its terms.
In April, 2024, Simpson openly called for Parkland to put itself up for sale and Engine quickly expressed support for a strategic review.
In response, Parkland issued a statement that called a strategic review “unnecessary” and disclosed for the first time that the company had rejected a takeover bid last year.
“In 2023, while having nominees on our Board, Simpson solicited a potential sale of Parkland at a valuation significantly below the Company’s intrinsic value,” the statement said.
“After careful consideration, the Board determined that pursuing this alternative would not serve the best interests of the Company and its shareholders,” Parkland’s then-chair Steven Richardson said in the statement.
Mr. Richardson retired last week, Parkland announced as part of its second-quarter financial results, exactly one year after he became chair and seven years after joining the board of directors. Refining industry veteran Michael Jennings, who joined Parkland’s board six months ago, became chair on July 31.
Shortly after Simpson called for Parkland to launch a strategic review, Scotiabank’s Mr. Isaacson said he believes Parkland is now effectively up for sale. In an April note to clients, he said it is possible Simpson could funnel its ownership position into a hostile bid.
Simpson Oil declined to comment through its lawyer.
Because Sunoco is a master limited partnership (MLP) and its offer was stock-based, the deal could have raised issues for Parkland’s Canadian shareholders. MLPs are considered U.S.-domiciled assets, meaning Canadians holding MLP shares could face taxation challenges in both countries.