UPDATED: Sunoco LP (SUN-N) will acquire Calgary-based Parkland Corporation (PKI-T) in a deal valued at US$9.1 billion that would create one of the largest independent fuel distributors in the Americas, but the deal is being opposed by its largest shareholder.

The transaction will fold Parkland's approximately 4,000 North American commercial and retail locations into Sunoco, which intends to form a company named SUNCorp, LLC as part of the deal. The proposed new company will hold partnership units of Sunoco that are economically equivalent to Sunoco's publicly traded common units.

“Sunoco shares our commitment to growth, customer service, operational excellence, and ongoing investment in Canada, making our combined business stronger and better positioned for sustained success," Bob Espey, president and CEO of Parkland, said in the announcement.

If the deal closes, Parkland’s shareholders will receive 0.295 units of SUNCorp and C$19.80 per Parkland share, a 25 per cent premium over the seven-day average price of Parkland and Sunoco shares as of May 2. Alternatively, Parkland shareholders can choose to receive C$44 per Parkland share in cash or 0.536 SUNCorp units, subject to proration.

Sunoco will maintain a headquarters in Calgary with “significant employment levels in Canada,” the release said.

Parkland’s fuel station brands include Esso, Pioneer, Ultramar and Chevron. Its flagship convenience store brand is On the Run, with over 300 locations in Canada, according to its website.

The company is also committed to investing in Parkland’s transportation energy infrastructure and its refinery in the Lower Mainland of B.C. that produces low-carbon fuels. Opportunities for reinvestment in Canada, the U.S. and the Caribbean will be opened up as part of the combined company.

The cash and equity transaction for the Canadian fuel distributor and convenience retailer includes assumed debt.

Parkland’s initiation of the transaction

Dallas-based Sunoco took an interest in Parkland because of the potential for quick growth and the complementary assets that provides “advantaged fuel supply and further diversifies Sunoco's portfolio and geographic footprint.”

Sunoco, an energy infrastructure and fuel distribution company operating in the U.S., Europe, Mexico and Puerto Rico, serves approximately 7,400 Sunoco and partner branded locations, along with independent dealers and commercial clients.

According to the release, Parkland’s board of directors reviewed options to maximize value for shareholders on March 5. The move led to further discussions with Sunoco, which resulted in the acquisition.

The special committee formed for the review made a unanimous recommendation for the decision, and Parkland’s board of directors was also unanimous in its approval.

Parkland’s leadership team includes North America president Marcel Teunissen, the company's former chief financial officer. 

A special meeting of Parkland shareholders will be held June 24 to vote on the transaction.

Largest shareholder Simpson Oil opposes the deal

Simpson Oil Ltd., the largest shareholder of Parkland with 19.8 per cent of its shares, said it is going to court in Alberta, calling the planned acquisition an attempt to delay a shareholder vote at Parkland’s annual general meeting scheduled for Tuesday. The event was cancelled and rescheduled for June 24.

The meeting was where shareholders would vote on director nominees put forward by Parkland and Simpson.

In a release, Simpson called on executive chair Mike Jennings to resign, along with all incumbent directors. The company accused Jennings of “poor decision making” which led to “value destruction”, and the board as having a “deplorable track record of governance”.

“With a board transition imminent, no material action should have been taken until new, shareholder-supported directors were in place,” Simpson said in a release. The company is calling for the annual general meeting to proceed as scheduled.

EDITOR’S NOTE: RENX will continue updating this breaking article with additional information as it becomes available.