An Ultramar gas station and On the Run store in Mississauga, Ont. in November, 2022. Sunoco has made a $7.7-billion bid for Parkland, which owns more than 4,000 gas stations under the Esso, Pioneer and Ultramar brands.Fred Lum/the Globe and Mail
Dallas-based Sunoco LP SUN-N has made a friendly takeover bid for Parkland Corp. PKI-T worth $7.7-billion, potentially ending the Calgary-based fuel distributor’s boardroom battle with its largest shareholder.
Sunoco offered $44 per Parkland share in a combination of its own shares and cash in an early Monday bid to create one of North America’s largest gas station and convenience store operators. Analysts said the takeover is likely to succeed, resolving a two-year dispute between Parkland and Simpson Oil Ltd., which owns 19.8 per cent of the company.
Cayman Islands-based Simpson Oil is attempting to improve Parkland’s financial performance by replacing the majority of its directors and its chief executive officer. On Friday, Simpson Oil said it had won shareholder support for its plan to name nine of 13 directors to Parkland‘s board at an annual meeting scheduled for Tuesday.
After announcing the takeover, Parkland moved its meeting to June 24 and included a vote on the Sunoco offer.
On Monday, the Court of King’s Bench of Alberta denied Simpson Oil’s request to hold the meeting on Tuesday, as originally scheduled. Simpson Oil declined comment on the Sunoco offer.
Parkland owns more than 4,000 gas stations under the Esso, Pioneer and Ultramar brands, and the On the Run convenience store chain. The company also runs a refinery in Burnaby, B.C., that supplies fuel to the province’s lower mainland. Sunoco owns 7,400 gas stations and a 22,500 kilometre pipeline network.
“This strategic combination is a compelling outcome for Parkland shareholders,” Michael Jennings, executive chair of Parkland, said in a press release on Monday.
“The board unanimously recommends the proposed transaction, recognizing Sunoco’s commitment to safeguarding Canadian jobs, retaining the Calgary head office, and further investing in Canada.”
Activist Simpson Oil poised to win Parkland boardroom battle
In 2023, Parkland turned down a takeover bid from Sunoco that valued the company at $45 per share, according to analysts and reports in The Globe and Mail.
Sunoco said buying Parkland will boost its distributable cash flow per unit by 10 per cent, and the company expects US$250-million cost savings from combining its businesses within three years of closing the transaction. Sunoco will also take on Parkland’s debt, bringing the total value of the transaction to US$9.1-billion.
“Our initial thought is that competing bids will be few and far between,” analyst Ben Isaacson at Bank of Nova Scotia said in a report on Monday. “To date, we haven’t seen any other interested parties in Parkland’s unique portfolio of energy infrastructure assets (either separately or combined).”
He added: “We think investors will jump at the 25 per cent premium on a stock that has been stuck in the mud on investor fatigue for quite some time.”
Parkland and Sunoco structured the takeover with a wrinkle meant to allow the deal to close, even if Simpson Oil votes against the transaction.
The acquisition is structured as a plan of arrangement, requiring approval from 66.6 per cent of votes cast by Parkland shareholders. However, Sunoco negotiated the right to switch the offer into a takeover bid, which only needs support from 50 per cent of all outstanding Parkland shares, at any time up until the June meeting.
The Parkland acquisition will also require approval from the federal government at a time when relations between the U.S. and Canada are in a deep freeze owing to President Donald Trump’s imposition of tariffs.
Earlier this year, Ottawa pledged to heighten reviews of deals deemed predatory owing to any decline in value of the Canadian target that derives from U.S. trade practices.
Sunoco has strong ties to Mr. Trump through the energy company‘s chair, Ray Washburne. The entrepreneur is former vice-chair for the Trump Victory Committee. He also previously served as finance chair of the Republican National Committee.
Sunoco is offering Parkland shareholders US$3-billion of units in a newly created New York Stock Exchange-listed company called SUNCorp and US$2.6-billion of cash. Parkland agreed to pay a $275-million break fee to Sunoco if the deal fails to close.
“Given the appropriate return compensation, $275mm break fee and strategic combination to create a leader in global fuel distribution, we expect shareholders will support the transaction,” analyst Nate Heywood at ATB Capital Markets said in a report.
On Monday, Parkland’s share price rose 5.5 per cent to close at $38.28 on the Toronto Stock Exchange. Sunoco’s share price fell 5.8 per cent on the NYSE.
Investment banks Barclays and RBC Capital Markets advised Sunoco and provided the debt financing. Law firms Stikeman Elliott LLP, Weil, Gotshal & Manges LLP, and Vinson & Elkins LLP acted as Sunoco’s legal advisers.
Goldman Sachs Canada Inc. and BofA Securities advised Parkland.
Parkland’s board formed a special committee to deal with the takeover, which hired BMO Capital Markets. Law firm Norton Rose Fulbright Canada LLP acted as Parkland’s legal adviser. Torys LLP acted as legal adviser to Parkland’s special committee.
(May 5, 2025) The photo caption was updated to provide more detailed information about Parkland.