Sunoco acquires Parkland for $9bn

July 2025 | DEALFRONT | MERGERS & ACQUISITIONS

Financier Worldwide Magazine

July 2025 Issue

US fuels distributor Sunoco has moved to expand its reach with a deal to acquire Canada’s Parkland Corporation for $9.1bn, including assumed debt.

This acquisition is expected to be immediately accretive, with more than 10 percent accretion to distributable cash flow per common unit and $250m in run-rate synergies by the third year.

Under the terms of the deal, Parkland shareholders will receive a mix of cash and shares. Parkland shareholders will receive 0.295 SUNCorp units and C$19.80 for each Parkland share held. They may also choose to receive C$44 per Parkland share in cash or 0.536 SUNCorp units per Parkland share, subject to proration. For two years following the transaction’s close, Sunoco will ensure that SUNCorp unitholders receive the same dividend equivalent as Sunoco unitholders.

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 New York Stock Exchange, and the satisfaction of certain other closing conditions customary for a transaction of this nature.

The transaction will be implemented as part of a plan of arrangement under the Business Corporations Act (Alberta) and will require approval by 66 2/3 percent of the votes cast by Parkland shareholders. Subject to the satisfaction of such conditions, the deal is expected to close in the second half of 2025. 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 $275m in certain circumstances.

The deal includes compelling financial benefits, industry-leading scale and stability, and accelerated accretive growth, according to Parkland. Sunoco expects to return to four-times its long-term leverage target within 12-18 months after closing the acquisition. The combined company will benefit from complementary assets, enabling an advantaged fuel supply and further diversifying Sunoco’s portfolio and geographic footprint.

“This strategic combination is a compelling outcome for Parkland shareholders,” said Michael Jennings, executive chairman of Parkland. “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. This partnership creates significant financial benefits for shareholders and would position the combined company as the largest independent fuel distributor in the Americas.”

“Today marks a significant milestone,” said Bob Espey, president and chief executive of Parkland. “This transaction delivers immediate value for shareholders, including an attractive 25% premium. 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.”

While Sunoco’s offer was unanimously approved by Parkland’s board, Parkland’s largest shareholder, Simpson Oil, called the deal a “last-ditch attempt” by Parkland’s board to retain control of the company. The move, Simpson claims, is a “clear breach of fiduciary duty” and an effort to avoid accountability to shareholders who had lined up behind a board overhaul.

Simpson, which owns 19.8 percent of Parkland’s outstanding shares, released a statement hours after Sunoco’s acquisition offer was made public, noting that: “Shareholders have spoken – they have lost faith in the current board.” The company also noted that over 60 percent of shares had been voted using its alternative ‘GOLD’ proxy card supporting new directors.

Parkland has come under increasing scrutiny from Simpson and other activist investors of late. Simpson specifically named Mr Jennings, accusing him of “value destruction and a prolonged battle” with shareholders. “This eleventh-hour manoeuvre represents a new turn in the Board’s deplorable track record of governance”, the firm wrote, calling for the immediate resignation of all 11 incumbent directors.

Richard Summerfield