Parkland Corp., which owns Pioneer gas and convenience stores, is putting itself up for sale, but the Canada-U.S. trade war could see Ottawa block American buyers.Sean Kilpatrick/The Canadian Press
One of the country’s largest gas-station chains put itself up for sale on Wednesday in the midst of a Canada-U.S. trade war that has domestic politicians promising to block predatory takeovers by American companies.
The board of Calgary-based Parkland Fuel Corp. PKI-T, which owns more than 4,000 outlets under banners such as On the Run, launched a strategic review that could include a sale of the company in response to an activist campaign from its largest shareholder, Simpson Oil Ltd.
“Parkland’s share price does not represent the value of the company, so it is incumbent on the board to turn over every stone in search of value‚” said Parkland chairman Michael Jennings in an interview. Mr. Jennings, who joined the board last year after running a U.S. energy company, said: “All options are on the table, including asset sales and M&A.”
Parkland’s market capitalization is $6.05-billion. Potential buyers include U.S. companies such Sunoco LP, which The Globe and Mail reported made an unsuccessful $8-billion offer for Parkland two years ago.
Parkland hired investment banks Goldman Sachs Canada Inc. and BofA Securities as its financial advisers. The company said: “There are no guarantees the strategic review process will result in a transaction.”
Seven years ago, Cayman Islands-based Simpson Oil acquired 19.8 per cent of Parkland, after founder Sir Kyffin Simpson sold his network of 526 gas stations stretching across 23 Caribbean countries for $2.35-billion in cash and shares.
Two years ago, Simpson Oil’s relationship with Parkland broke down. Two Parkland directors appointed by Simpson Oil resigned in a dispute over governance. Last month, Simpson Oil won a court battle over its right to request a strategic review. Parkland stock jumped 17 per cent after the court decision, on expectations that the company could be sold.
On Wednesday, Mr. Jennings said the Parkland board launched the strategic review as part of an attempt to “reconcile with the Simpsons and bring them back in the tent.” Parkland’s decision to stage a strategic review was made well before the U.S. imposed tariffs and launched a trade war, said Mr. Jennings.
On Wednesday, Parkland also announced revenues of $28.3-billion in 2024, down from $32.5-billion the previous year, and adjusted earnings of $405-million last year, compared with $626-million in 2023. Parkland chief executive officer Bob Espey said sales and earnings fell because of an unplanned shutdown at Parkland’s refinery in Burnaby, B.C., and because rising oil prices lowered profit margins.
Parkland is in the middle of a five-year plan to shift from relying on selling gasoline. That shift includes building EV charging stations and adding more food options to its convenience stores. Mr. Espey said the diversification strategy is performing well. He said the trade war between Canada and the U.S. represents a headwind for Parkland businesses that depend on business activity, such as diesel-fuel sales to truckers.
Any U.S. bidder for Parkland will face increased scrutiny from the federal government over concerns that President Donald Trump’s imposition of tariffs on U.S. imports will depress the value of Canadian companies and leave them vulnerable to cross-border acquisitions.
On Tuesday, Prime Minister Justin Trudeau said: “We will take measures to prevent predatory behaviour that threatens Canadian companies because of the impacts of this trade war, leaving them open to takeovers.”
On Wednesday, Industry Minister François-Philippe Champagne announced plans to update the Investment Canada Act so economic security is a factor when deciding if a deal can go ahead.
In the summer of 2023, Parkland turned down an $8-billion takeover offer from Dallas-based Sunoco LP, one of the largest U.S. gas-station operators, The Globe and Mail reported. Parkland disclosed that it received an offer that undervalued the company, but provided no details on the bid’s size or source.
Sunoco’s chairman, Texas entrepreneur Ray Washburne, has close ties to Mr. Trump and served as finance chairman of the Republican National Committee for three years. Sunoco is structured as a limited partnership, which means the company distributes most of its cash to shareholders as dividends, a tax-efficient structure for an investor such as Simpson Oil.
Last week, Simpson Oil released a letter to Parkland’s board that said “a transaction was available to shareholders at a material premium to Parkland’s share price at the time and for most of the period since.”
“If the board rejected this takeover interest based on confidence in the company’s stand-alone plan, recent performance suggests a need for continued evaluation of whether this remains the best approach,” said Simpson Oil.
Parkland’s largest domestic competitor is Alimentation Couche-Tard Inc. ATD-T, a global leader in the convenience store sector. Bankers say Couche-Tard is unlikely to bid for Parkland, as the Montreal-based company is focused on acquiring 7-Eleven parent Seven & i Holdings. In addition, a Couche-Tard purchase of Parkland would raise significant issues for Canadian competition regulators.