Sunoco has announced a decisive agreement to acquire all outstanding shares of Parkland Corporation in a transaction of approximately $9.1 billion ($125.7 billion) including its expected debt.
The acquisition is expected to be added soon, with over 10% of the synergy between distributed cash flow and run rates per common unit per unit adding to $250 million.
Under the terms of the agreement, Parkland shareholders will receive a Suncorp unit of 0.295 and $19.80 per Parkland share.
Parkland shareholders may also receive $44 per share per Parkland in cash or 0.536 Suncorp units per Parkland share for comparison.
For two years from the end of the transaction, Sunoco guarantees that Suncorp Unitholders receive the same dividend equivalent as Sunoco Unitholders.
The transaction will be implemented as part of the arrangement plan under the Business Corporations Act (Alberta) and will require approval by 66 2/3% of the votes cast by Parkland shareholders.
Parkland’s directors and senior executives, who hold 0.7% of the shares, have pledged to vote in favor of the transaction.
Parkland Executive Chairman Michael Jennings said: “This strategic combination is a compelling outcome for Parkland shareholders. The board recognizes Snowco’s commitment to protecting Canadian employment, maintaining Calgary headquarters and investing further in Canada, and unanimously recommends the proposed deal.
“This partnership will provide great financial benefits to shareholders and position the integrated company as America’s largest independent fuel distributor.”
The deal includes attractive financial gains, industry-leading scale and stability, and, according to Parkland, increased acceleration.
Sunoco expects to return to its 4x long-term leverage target within 12-18 months of closing the acquisition.
The total company will benefit from complementary assets, allowing for a lucrative fuel supply, further diversifying Sunoco’s portfolio and geographic footprint.
“We’re committed to providing a great opportunity to help you,” said Bob S.P., President and CEO of Parkland.
“Sunoco shares our commitment to growth, customer service, operational excellence and continuous investment in Canada, enhancing our business and putting ourselves stronger for success.”
Sunoco will continue to invest in Burnaby refineries, known for producing low-carbon fuels, which will continue to supply and supply fuel within the lower mainland.
