Sunoco LP Completes $9.1 Billion Acquisition of Parkland Corporation

Sunoco LP, a prominent energy infrastructure and fuel distribution master limited partnership, has made headlines recently with its announcement of a definitive agreement to acquire Parkland Corporation. This significant deal, valued at approximately $9.1 billion, involves both cash and equity, along with assumed debt. This acquisition represents a strategic maneuver in the rapidly evolving fuel distribution sector and promises to reshape the competitive landscape across North America.

The announcement was made on May 5, 2025, and has been met with enthusiasm from Parkland's leadership. Michael Jennings, Executive Chairman of Parkland, expressed confidence in the merger, noting that Sunoco’s commitment to maintaining jobs in Canada and preserving Parkland's Calgary headquarter positions demonstrates a shared vision for growth and development. The Board of Directors at Parkland has unanimously recommended the proposal to shareholders, highlighting its potential benefits, including a competitive premium of 25% on the Parkland shares based on recent trading averages.

Bob Espey, President and CEO of Parkland, echoed similar sentiments, emphasizing that the merger will offer immediate value to shareholders and strengthen operational capabilities. Both companies believe that the combination will result in the largest independent fuel distributor across the Americas, bringing enhanced financial benefits and opportunity for future growth.

Key Strategic Advantages

This merger is not merely a financial transaction; it represents a collaborative effort to drive long-term strategic benefits. With a commitment to being immediately accretive, the partnership anticipates a 10% or greater rise in distributable cash flow per common unit. Furthermore, an estimated $250 million in run-rate synergies is expected by the third year post-closing, establishing a prosperous trajectory for the newly formed entity.

The acquisition will facilitate increased cash flow generation essential for reinvestment and distribution growth, bolstering operations in Canada and beyond. With complementary assets from both organizations, the strategic combination enhances fuel supply channels and diversifies Sunoco's portfolio, positioning the enterprise strongly within the market.

Commitment to Canadian Operations

A crucial aspect of the deal is Sunoco's explicit commitment to sustaining employment levels in Canada, maintaining Parkland's operational headquarters in Calgary, and further investing in Canadian energy infrastructure. This dedication is particularly noteworthy as it underscores Sunoco's strategy of responsible stewardship within the communities it serves. Parkland's Burnaby Refinery, renowned for producing low-carbon fuels, will continue operating under this new partnership, assuring local supply stability.

Parkland has an ambitious vision for expanding its transportation energy infrastructure across Canada, and Sunoco is ready to support this initiative, presenting expansive investment opportunities that underline the partnership's commitment to sustainable growth.

Transaction Details and Approvals

Under the terms of the acquisition agreement, Parkland shareholders will earn 0.295 SUNCorp units along with a cash component of C$19.80 per share. This merger necessitates a plan of arrangement as per Alberta’s Business Corporations Act, requiring both shareholder and court approvals to proceed. With a slated vote on June 24, 2025, shareholders will have the critical opportunity to review and discuss the transaction's framework and its expected benefits.

The strategic engagement has also triggered a comprehensive review process conducted by a special committee of independent directors at Parkland, aimed at exploring avenues for maximizing shareholder value.

Navigating Future Prospects

Parkland's Board of Directors, amidst its evaluations, has expressed full support for the transaction, having consulted with financial and legal advisors to ensure the best outcomes for shareholders. Goldman Sachs Canada Inc. and BofA Securities have provided their assessments endorsing the fair valuation of the deal for Parkland shareholders, further solidifying confidence in this merger.

Moreover, the transaction is set to close in the latter half of 2025, subject to fulfilling applicable regulatory approvals and other customary conditions. As both organizations prepare to navigate this new chapter, the anticipated outcomes suggest a robust future for the combined entity, one that seeks to leverage their shared strengths for comprehensive market growth.

With eyes set on the upcoming special meeting and subsequent voter engagement, stakeholders of both companies eagerly await the unfolding of this transformative deal, which not only promises to benefit shareholders but also emphasizes a commitment to the communities in which they operate.