In a statement, Parkland said the size of Simpson Oil’s proposed slate of directors is 'a desperate and self-interested attempt ... to seize full control of Parkland without paying a control premium.' Parkland’s On the Run store in Mississauga, Ont. on Nov 29, 2022.Fred Lum/The Globe and Mail
Facing a revolt from its largest shareholder, Parkland Corp. PKI-T is fighting back.
Simpson Oil Ltd., which owns 19.8 per cent of the Calgary-based refuelling station operator, has nominated nine people to sit on Parkland’s 11-member board of directors. Parkland, however, is urging shareholders to vote against all but three of those nominees at the company’s May 6 annual general meeting.
Parkland is proposing its own slate of 13 directors, including all existing board members except for Lisa Colnett – who has reached the limit of her 10-year term – and three of Simpson Oil’s proposed nominees. Simpson Oil has been calling for a sale of the company since April, 2024, arguing its performance has “fallen short of our expectations.”
In a statement, Parkland said the size of Simpson Oil’s proposed slate of directors is “a desperate and self-interested attempt by Simpson, a minority shareholder, to seize full control of Parkland without paying a control premium.”
Michael Jennings, a refining industry veteran who joined the Parkland board in early 2024 and currently serves as chair, said the company has tried multiple times over the past 12 months to negotiate a compromise with Simpson Oil.
“The message back has always been one of control,” Mr. Jennings said. “We have tried like crazy. We have put a lot of different proposals in front of them. They come back with ‘if it is not control of the board, we will let the shareholders decide in the election.’”
“We feel like we’ve got a hell of a good team assembled,” he said. “We are not going to give it up easily.”
The company’s Toronto Stock Exchange-listed shares have lost nearly a quarter of their value since Simpson first called for Parkland to be sold last year, declining 24.1 per cent from $42 a share on April 8, 2024, to $31.88 when markets closed Friday.
That gives Parkland a current market value of slightly more than $5.5-billion.
During the summer of 2023, Parkland rebuffed a $45-a-share takeover offer worth nearly $8-billion from Texas-based Sunoco LP.
Parkland owns more than 4,000 gas stations – including well-known brands such as Esso, Chevron, Ultramar and Pioneer – and electric-vehicle charging terminals across Canada, the United States and the Caribbean, along with On the Run convenience stores and the M&M Food Market chain.
The company 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 Oil obtained its ownership stake in Parkland through those transactions, but the relationship quickly soured.
The three Simpson Oil nominees Parkland is supporting are former Walmart Inc. executive Karen Stuckey, Investment Management Corporation of Ontario board chair Brian Gibson, and Michael Christiansen, a 39-year-old investment manager for Simpson Oil’s founding family who previously served on Parkland’s board for seven months.
Mr. Christiansen and Marc Halley left the board in late 2023 after Parkland refused to name one of them chair, The Globe and Mail reported at the time.
Simpson Oil subsequently declared its governance agreement with Parkland invalid. Parkland repeatedly disagreed, but in February, an Ontario Superior Court judge sided with Simpson Oil. That ruling allowed Simpson Oil, a family-owned business founded by Sir Kyffin Simpson and based in the Cayman Islands, to openly solicit buyout offers for Parkland.
Two weeks later, on Feb. 25, Simpson Oil publicly released a letter to Parkland’s board of directors raising “significant concerns about the effectiveness of its current strategy and leadership” and repeating its call for a strategic review of the business. Parkland launched a strategic review the following week, hiring Goldman Sachs Canada and BofA Securities as financial advisers and releasing a statement cautioning “there are no guarantees that a strategic review will result in a transaction.”
On March 17, another major Parkland shareholder called for the company’s entire board of directors to be replaced. New York-based hedge fund Engine Capital LP, which owns a 2.5-per-cent stake in Parkland and has supported Simpson Oil’s push for a sale in the past, said the board “cannot be trusted to oversee the strategic review.”
Mr. Jennings said Parkland has already received unsolicited expressions of interest in parts of the business as well as the entire company.
“We are at the early stages, but it is going to be a very active process,” he said.
The Simpson family earns tens of millions of dollars in annual dividends through its stake in Parkland. But as The Globe has previously reported, the family could earn tens of millions more if Parkland was sold to a master limited partnership (MLP) like Sunoco.
Sunoco, which is controlled by billionaire Kelcy Warren, has a current dividend yield of 6.71 per cent. Parkland, by comparison, has a current dividend yield of 4.52 per cent.
However, the idea of an American company buying Parkland became a more complicated prospect last month, when Ottawa updated its guidelines for foreign investment reviews to prevent what it described as “predatory” acquisitions of Canadian companies affected by the continuing North American trade war. At the time, The Globe reported that any U.S. bidder for Parkland will face increased regulatory scrutiny.