#United States #Dallas #Acquisition #Sunoco #Parkland

Sunoco LP to Acquire Parkland Corporation

In a recent strategic move, Sunoco LP (NYSE: SUN) has announced its plan to acquire Parkland Corporation (TSX: PKI) in a transaction valued at approximately $9.1 billion, which includes the assumption of Parkland's existing debt. The merger marks a significant step for Sunoco as it seeks to expand its operations and enhance its competitive edge in the energy sector.

Details of the Transaction

As part of the agreement, Parkland shareholders are set to receive 0.295 units of a newly formed entity, SUNCorp, LLC, alongside cash payments. The offered compensation represents a 25% premium based on the weighted average prices of both companies leading up to the announcement. Shareholders also have the option to choose cash or additional units, subject to certain conditions to ensure balance in the payouts.

Financial Implications

To facilitate the cash component of the deal, Sunoco has secured a $2.65 billion bridge loan for a 364-day term. Financial analysts anticipate immediate accretion of over 10% in distributable cash flow per unit after the merger, alongside projected synergies amounting to $250 million by the third year.

The boards of both companies have unanimously approved the transaction, which is expected to close in the second half of 2025, pending shareholder and regulatory approvals. This strategic merger is seen as mutually beneficial due to the complementary nature of their operations and the expanded geographical footprint, thereby diversifying Sunoco’s portfolio.

An Expanding Footprint in Canada

A notable aspect of this acquisition is Sunoco's commitment to maintaining its Canadian headquarters in Calgary, ensuring significant employment levels in Canada. Sunoco has also pledged to invest in Parkland’s Burnaby Refinery, which specializes in producing low-carbon fuels. This investment showcases their dedication to environmentally friendly practices while ensuring continuous operations at key facilities.

Infrastructure and Investment

The acquisition targets further enhancements to Parkland's Canadian transportation energy infrastructure. The combined free cash flow from the new entity opens additional investment avenues across Canada, the Caribbean, and the United States, aligning with the strategic ambitions of both companies.

Management and Advisor Input

In a conference call scheduled for May 5, 2025, Sunoco's management team plans to further discuss the implications and strategic benefits of this transaction. Both companies have engaged leading financial advisory firms, including Barclays and Goldman Sachs, to guide the merger process.

With this acquisition, Sunoco positions itself to be a stronger player within the fuel distribution market, directly impacting the availability and innovation of fuel products while focusing on sustainability and growth in operations. As businesses globally re-evaluate their energy strategies, this move by Sunoco illustrates its commitment to evolving with the industry.

The roadmap ahead for Sunoco will involve ensuring smooth integration between the two businesses and harnessing the synergies to maximize shareholder value, while still focusing on maintaining quality and service excellence across its expanded network.

Further information regarding the acquisition can be found in the Investor Relations sections of both Sunoco and Parkland’s websites, underscoring the openness and transparency surrounding the transaction’s details.