Sunoco LP to Acquire Parkland Corporation in Major Deal Valued at $9.1 Billion

Sunoco LP and Parkland Corporation's Strategic Acquisition

In a significant move within the energy sector, Sunoco LP (NYSE: SUN) has reached a definitive agreement to acquire Parkland Corporation (TSX: PKI) for a remarkable total consideration of about $9.1 billion, which includes assumed debt. This acquisition, announced on May 8, 2025, highlights Sunoco's strategic commitment to strengthening its position in the fuel distribution market.

Details of the Transaction

Under the terms of the agreement, Parkland shareholders will receive a combination of 0.295 units of SUNCorp and CAD $19.80 for every share held. This offer represents a 25% premium based on the average trading price of Parkland shares. Shareholders can also choose between receiving CAD $44.00 in cash or 0.536 units of SUNCorp per share, subject to proration to ensure that the total cash payment does not exceed CAD $19.80 for each Parkland share.

The transaction, which significantly expands Sunoco's operational capabilities, is expected to close in the second half of 2025, pending necessary shareholder and regulatory approvals, including securing 66.67% of the voting shares from Parkland's shareholders.

Employment and Operational Commitments

A key aspect of this acquisition is Sunoco's pledge to maintain significant employment levels in Canada, retaining the Calgary headquarters of Parkland and continuing investments in Canadian operations. Bob Espey, President, and CEO of Parkland emphasized that this merger will not only provide immediate value to Parkland shareholders but also facilitate ongoing growth and service excellence in the region.

In addition, Sunoco has committed to upholding operations at Parkland's Burnaby Refinery, which specializes in producing low-carbon fuels while ensuring safe and sustainable operational practices in the long term.

Strategic Benefits of the Acquisition

The merger is poised to deliver substantial financial benefits, projecting an immediate increase of over 10% in distributable cash flow per common unit. The combined entity is also expected to realize $250 million in execution-run synergies within the third year post-merger. Such synergies will help return the company to Sunoco's long-term leverage target of 4x within 12 to 18 months of closing.

The merger of these two energy giants presents enhanced scale and stability, diversifying Sunoco's existing portfolio and extending its geographical reach in the market. The agreement is framed within a strategic landscape aimed at accelerating cash flow generation, allowing for reinvestment and distribution growth across North America and the Caribbean.

Shareholder Support and Future Outlook

The Board of Directors of Parkland, which initiated a review process for strategic alternatives, unanimously recommends this transaction. The special committee overseeing the negotiation has consulted with financial and legal advisors, reinforcing the deal's fairness and financial soundness for Parkland’s shareholders. Goldman Sachs Canada Inc. and BofA Securities provided valuation opinions to support the transaction's financial viability.

Furthermore, the upcoming special shareholders meeting on June 24, 2025, will facilitate the voting process for the merger approval, giving stakeholders ample time to comprehend the deal and its implications fully.

Conclusion

In summary, the acquisition of Parkland Corporation by Sunoco LP represents a transformative move within the energy distribution sector. With a firm commitment to maintaining Canadian jobs, operational growth, and delivering value to shareholders, both companies are set to redefine their expansive capabilities and market positioning. Stakeholders are optimistic about this merger, anticipating a robust future for the combined entity as they leverage their strengths for continued success.