The deal comes as Parkland's largest shareholder, Simpson Oil Ltd., appears to be on the verge of gaining control of the Calgary-based company's board of directors. Simpson has launched a proxy fight and said Friday it has secured a majority stake.
“This combination creates the largest independent fuel distributor in America. The combined company will distribute more than 15 billion gallons annually,” Sunoco CEO Joe Kim said in a call with investors. “We expect the immediate transaction to be accretive to at least 10% of the distributable cash flow per unit and at least $250 million in annual synergies by year three.”
There are no plans for a large-scale asset sale, but executives are not ruling it out. “We think it will be hard for people to turn down this offer,” Kim said.
Bob Espey, Parkland's longtime CEO, announced last month that he planned to step down after months of pressure from Simpson. Parkland, which operates about 4,000 gas stations under brands such as Esso, Chevron, Ultramar and Pioneer, also processes and retails consumer goods and has operations in Canada, the United States and the Caribbean.
Simpson owns 19.8% of the shares and has criticized Espey and Parkland management, accusing them of repeatedly failing to provide financial guidance, making misguided acquisitions and controlling rising costs. He has also pushed for greater transparency and a review of capital allocation policies.
The Sunoco deal marks a dramatic turnaround for Parkland, which in March began a formal strategic review after facing growing pressure from Simpson and activist investors, including New York hedge fund Engine Capital LP.
Source: Bloomberg
