Recently, Canadian fuel retailer and refiner Parkland Corp. (TSX: PKI) announced a $9.1 billion acquisition agreement with Sunoco LP, but the deal is facing strong opposition from its major shareholder, Simpson Oil. On Monday evening, the Alberta court ruled in favor of Parkland’s decision to postpone its annual shareholder meeting. Originally scheduled for this week, the meeting is now pushed to June 24, during which shareholders will vote on both the acquisition agreement and the new board of directors candidates.
At the heart of the corporate control dispute, Simpson Oil, which holds nearly 20% of Parkland’s shares, has accused the management of attempting to “retain power” by delaying the shareholder meeting. Simpson argued in its court filing that Parkland’s actions to postpone the meeting and push forward the acquisition prior to a board reshuffle were a “clear breach of fiduciary duty.” However, Justice Douglas Mah stated that forcing the meeting to proceed as initially planned would create confusion for shareholders and the market.
Under the terms of the deal, Dallas-based Sunoco will acquire Parkland through a cash-and-stock transaction, creating the largest independent fuel distributor in the Americas following the merger. After the deal closes, Parkland shareholders will have the option to select from three compensation plans:
Additionally, Sunoco will assume Parkland’s existing debt as part of the deal.
The acquisition is subject to shareholder approval, regulatory clearances, and compliance with the Investment Canada Act. Sunoco has committed to:
Parkland’s CEO, Bob Espey, stated that the merger with Sunoco maximizes value for shareholders while reaffirming the company’s and Sunoco’s commitment to Canada. However, Simpson Oil has strongly criticized the management, accusing them of rejecting a previous offer in 2023 that included a “substantial premium.” Simpson has demanded the resignation of 11 current board members, including Executive Chair Mike Jennings.
Simpson Oil’s dissatisfaction with Parkland’s management has escalated, with recent public accusations of poor corporate performance. This marks a sharp turn from its earlier confidence in the company following Parkland’s acquisition of Sol, a Caribbean fuel marketer previously owned by Simpson. Parkland acquired a 75% stake in Sol for C$1.6 billion in 2019 and later purchased the remaining shares in 2022, doubling Simpson’s stake in Parkland.
Most analysts regard the offer as appealing to shareholders:
This high-profile acquisition, coupled with internal shareholder disputes, remains one of the most closely watched corporate developments in Canada, with much riding on the June 24 vote.
