The convenience retailing world is anxiously waiting to see if Sunoco’s $9.1 billion bid to acquire Parkland Corp.’s fuel business and thousands of c-stores across North America gets approved next month. If it goes through, the third time really is the charm for Sunoco, which tried to acquire Parkland two other times in prior years, according to a recent joint presentation from both companies.
Sunoco’s first bid came in July 2023, when it offered to acquire Parkland for $38.50 per share — 40% in cash and 60% in equity — according to the presentation. That represented a 15% premium to Parkland’s share price at the time.
Parkland reviewed the offer with its legal and financial advisors and determined that it undervalued the company and posed a number of issues for shareholders, according to the presentation. Parkland declined the offer without improved terms.
That didn’t stop Sunoco from trying again a month later. Its second offer was $45 per share, again with 40% in cash and 60% in equity, which represented a 23% premium from Parkland’s shares. This placed the value of the deal at about $7.9 billion.
Parkland formed a committee of independent directors — once again supported by legal and financial advisors — to review the new proposal. According to the presentation, the committee determined that Sunoco’s offer “did not resolve structural issues” and still undervalued Parkland, which once again declined the offer without any counter.
Sunoco went quiet after its second rejection, but that changed when Parkland commenced its strategic review this past March. At the time, Parkland said it would explore numerous options to try to maximize shareholder value, including mergers, divestitures, acquisitions and even an outright sale of the struggling company.
Sunoco came calling again in April, according to the presentation. Its third offer was for $41.50 per share, half cash and half equity, which represented a 27% premium from where Parkland’s shares were at the time. Parkland received guidance from its special committee once again, and the team negotiated the final deal of $44 per share, a 25% premium, which resulted in the current deal valued at $9.1 billion.
As part of the deal, Sunoco will form a new publicly traded company named Sunoco Corp, LLC, and will retain headquarters in Parkland’s home base of Calgary, Alberta. If approved, the combined company would be the largest independent fuel distributor in the Americas.
Parkland’s shareholders will vote on the deal during the company’s annual meeting on June 24.
Editor’s note: This story was updated to correct Sunoco’s bid price for Parkland.
