Sunoco to Buy Parkland Corp in $9B Deal

In a release posted on its site on Monday, Sunoco LP announced that it will acquire Parkland Corporation in a transaction valued at $9.1 billion.

Sunoco noted in the release that the parties have entered into a definitive agreement whereby Sunoco will acquire all outstanding shares of Parkland in a cash and equity transaction. The deal includes assumed debt, Sunoco highlighted.   

In the release, Sunoco stated that, under the terms of the agreement, Parkland shareholders will receive 0.295 SUNCorp units and C$19.80 for each Parkland share, “implying a 25 percent premium based on the 7-day VWAP’s of both Parkland and Sunoco as of May 2, 2025”.

Sunoco added that Parkland shareholders can elect, in the alternative, to receive C$44.00 per Parkland share in cash or 0.536 SUNCorp units for each Parkland share, “subject to proration to ensure that the aggregate consideration payable in connection with the transaction does not exceed C$19.80 in cash per Parkland share outstanding as of immediately before close and 0.295 SUNCorp units per Parkland share outstanding as of immediately before close”.

Sunoco highlighted in the release that it has secured a $2.65 billion 364-day bridge term loan for the proposed cash consideration and said the transaction has been unanimously approved by the board of directors of both companies. It is expected to close in the second half of 2025 upon the satisfaction of closing conditions, including approval by Parkland’s shareholders and customary regulatory and stock exchange listing approvals, Sunoco noted in the release.

As part of the transaction, Sunoco intends to form a new publicly traded Delaware limited liability company named SUNCorp, LLC, Sunoco revealed in the release.

“SUNCorp will hold limited partnership units of Sunoco that are economically equivalent to Sunoco’s publicly traded common units on the basis of one Sunoco common unit for each outstanding SUNCorp unit,” the company stated.

“This new publicly traded entity will be treated as a corporation for tax purposes. For a period of two years following closing of the transaction, Sunoco will ensure that SUNCorp unitholders will receive the same dividend equivalent as the distribution to Sunoco unitholders,” it added.

Outlining the “strategic rationale” for the deal in the release, Sunoco noted “compelling financial benefits”, “strong industrial logic”, and “accelerated accretive growth”. In a section of the release headed “benefits to Canada and responsible stewardship”, Sunoco said it will maintain a Canadian headquarters in Calgary and “significant employment levels in Canada”. Looking at the Burnaby refinery, Sunoco also noted that it is “committed to continuing to invest in Parkland’s innovative refinery, which produces low-carbon fuels, while maintaining safe, healthy and growing operations for the long-term”.

Sunoco went on to state that it will continue to support Parkland’s plan to expand its Canadian transportation energy infrastructure and said the combined company’s expanded free cash flow will provide additional resources for reinvestment in Canada, the Caribbean, and the United States in support of both existing and new opportunities.

‘Compelling Outcome’

In a release posted on its website on Monday, Parkland confirmed the agreement with Sunoco.

Parkland also noted in that release that the proposed transaction will be effected pursuant to a plan of arrangement under the Business Corporations Act (Alberta), which it said is required to be approved by an Alberta court.

“The transaction will require approval by 66 2/3 percent of the votes cast by the shareholders of Parkland,” Parkland stated in the release.

“The agreement also contains an option whereby Sunoco, at its election any time before … [a meeting of Parkland shareholders on June 24,] may elect to effect and complete the transaction on the same terms by way of a take-over bid, which would require support from Parkland shareholders owning at least 50 percent of Parkland’s outstanding shares,” it added.

“The directors and senior officers of Parkland, collectively holding 0.7 percent of the Parkland shares, have entered into customary voting support agreements, pursuant to which they have committed to vote their common shares held in favor of the transaction,” it continued.

In addition to shareholder and court approvals, the transaction is subject to applicable regulatory approvals, including approvals under the Investment Canada Act, approval of the listing of the SUNCorp shares to be issued under the Transaction on the NYSE, and the satisfaction of certain other closing conditions customary for a transaction of this nature, Parkland stated in the release.

“Subject to the satisfaction of such conditions, the transaction is expected to close in the second half of 2025,” the company highlighted.

“The agreement includes customary deal protections, including fiduciary-out provisions, non-solicitation covenants, and the right to match any superior proposals, subject to Parkland paying a break fee in the amount of $275 million in certain circumstances,” it went on to state.

Parkland noted in the release that it intends to hold a special meeting of Parkland shareholders on June 24, 2025, to approve the transaction.

“The annual general meeting of Parkland shareholders, which was originally scheduled for May 6, 2025, has been cancelled and will instead be held on June 24, 2025, concurrent with the special meeting … allowing Parkland’s shareholders adequate time to fully evaluate the transaction and its benefits,” it added.

“Shareholders as of the record date of May 23, 2025, will be eligible to vote at the meeting,” the company revealed.

“The current directors have agreed to stand for election at the upcoming meeting in order to consummate the transaction, if supported by Parkland’s shareholders. These directors have agreed to stand down in favor of any alternative slate if the transaction is not supported,” it added.

Parkland pointed out in its release that, on March 5, 2025, the company announced that its board of directors had initiated a review of strategic alternatives aimed at identifying opportunities to maximize value for all shareholders.

“A special committee of independent directors … was appointed to oversee and lead this comprehensive review,” the company said.

“Following this announcement, discussions with Sunoco intensified significantly, leading to the transaction,” it added.

“Based on the unanimous recommendation of Parkland’s Special Committee, and following thorough consultation with its financial and legal advisors, Parkland’s board of directors has unanimously approved the transaction,” it continued, noting that the board strongly recommends that shareholders vote in favor of the deal.

In the release, Michael Jennings, Executive Chairman of Parkland, said, “this strategic combination is a compelling outcome for Parkland shareholders”.

“The board unanimously recommends the proposed transaction, recognizing Sunoco’s commitment to safeguarding Canadian jobs, retaining the Calgary head office, and further investing in Canada,” he added.

“This partnership creates significant financial benefits for shareholders and would position the combined company as the largest independent fuel distributor in the Americas,” he continued.

To contact the author, email andreas.exarheas@rigzone.com