Sunoco announced Monday that it has agreed to buy Parkland Corp., a Canadian fuel retailer and distributor for $9.1 billion in cash and stock, including assumption of debt.
The combination of Dallas-based Sunoco and Parkland would make the combined company the largest distributor of fuels in the Americas. Sunoco is the largest independent fuel distributor in North America. Parkland’s distribution network includes more than 4,000 retail and convenience store locations across 26 countries.
In their joint announcement, Sunoco has agreed to maintain a headquarters in Canada along with significant Canadian employment. In addition to regulatory approvals Canada’s Business Corporations Act, requires that the transaction be approved by a court in Alberta along with two-thirds of votes cast by Parkland shareholders at the company’s annual meeting currently scheduled for June 24.
Significantly, Sunoco holds an option to pursue its purchase as a “take-over” bid at any time before the meeting, a move that would require only a 50 percent shareholder approval.
The deal presumably creates a new position of strength for the management of Calgary-based Parkland which has been under significant proxy pressure from its largest stockholder, Simpson Oil, which now says it will attempt to block the deal in court.
For at least four years, Simpson Oil, a family-owned company based in the Cayman Islands, has been waging a proxy battle for control of the Parkland board alleging that poor decision-making by company management has eroded the value of its stock.
Legal advisors on the transaction for Parkland include Norton Rose Fulbright Canada and Torys for the company’s special committee.
Legal advisors for Sunoco include Stikeman Elliott, Vinson & Elkins and Weil.
Goldman Sachs Canada, BofA Securities are acting as financial advisors to Parkland. BMO Capital Markets advised the special committee.
Barclays and RBC Capital Markets are the exclusive advisors to Sunoco, while Barclays and RBC Capital Markets provided financing.
Under specific terms of the agreement Parkland stockholders will receive 0.295 SUNCorp units and $C19.80 (US$14.26) for each of their shares. For a period of two years after closing Sunoco also guarantees the same level of distribution for Parkland shareholders as for holders of SUNCorp units.
Sunoco also agreed to support Parkland’s plans to expand its Canadian transportation energy infrastructure and to invest in Parkland’s Burnaby Refinery.
The Vinson & Elkins team was led by partners Lande Spottswood (Houston), Ramey Layne (Denver), Jackson O’Maley (Houston), Ben Heriaud (New York) and Caitlin Turner (New York).
They were assisted by senior associate Layton Suchma (Houston) and associates Walt Baker (Houston), Michelle Yang (Houston), Patience Li (Houston), Rachel Campbell (Houston), and Ethan Twining (Houston), along with members include counsel Maya Bobbitt (New York) and associates Cam Viney (Washington, D.C.) and Sara Johnson (Houston); partners Ryan Carney (Houston) and Gary Huffman (Washington, D.C.), senior associate Dan Henderson (Houston) and associate Tripp Haskins (Houston).
The Weil team from New York was led by partners Michael Aiello, Sachin Kohli and Michelle Sargent.