Dallas-based fuel supplier Sunoco has announced a $9.1 billion agreement to acquire Parkland, a Canadian fuel refiner and retailer headquartered in Calgary. The transaction, which includes Parkland’s debt, will form the largest independent fuel distributor in the Americas. The agreement was unanimously approved by Parkland’s board of directors, though it immediately drew criticism from Parkland’s largest shareholder, Simpson Oil. Holding nearly 20% of Parkland’s shares, Simpson labeled the deal a desperate move by the board to retain control and attempted to block the transaction through a court injunction, aiming to force the company to hold its previously scheduled annual general meeting. However, the Alberta court rejected Simpson’s request.
Sunoco initially expressed interest in Parkland back in 2023, but its initial offer was not accepted. The board of Parkland reportedly remained open to further negotiations, setting the stage for the current agreement. According to the deal terms, Parkland shareholders will receive C$19.80 in cash and 0.295 Sunoco units per share, representing a 25% premium over Parkland’s recent average trading price. The offer arrives as Parkland seeks to enhance its financial footing following a strategic review launched in March in response to shareholder pressure, particularly from Simpson Oil and activist investor Engine Capital, both critical of the company’s underwhelming stock performance.
The planned merger also includes Parkland’s Burnaby refinery, which supplies about 25% of British Columbia’s transportation fuel. The acquisition will significantly expand Sunoco’s presence, adding Parkland’s network of 4,000 retail and commercial sites across Canada, the U.S., and the Caribbean to its own 7,400-location footprint spanning the U.S., Puerto Rico, Europe, and Mexico. Analysts believe that Sunoco, given its scale and strategic alignment with Parkland’s assets, is best positioned to carry out this acquisition. The transaction is expected to generate over $250 million in annual cost synergies by its third year and will increase cash flow by over 10%, according to Sunoco. The company anticipates a return to target debt levels within 12 to 18 months post-closing. To finance the deal, Sunoco has secured a $2.65 billion bridge loan. Subject to regulatory approval under the Investment Canada Act, the transaction is expected to close in the second half of the year. Sunoco has committed to maintaining Parkland’s Calgary headquarters, preserving Canadian jobs, and continuing investment in the Burnaby refinery.
READ MORE: