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CALGARY - Parkland Corporation (TSX: PKI), a prominent fuel distributor, announced today the filing of its Management Information Circular in preparation for its upcoming annual and special meeting. This meeting will address the company’s previously disclosed strategic transaction with Sunoco LP and SunocoCorp, a wholly-owned subsidiary of the Sunoco group. Sunoco, with a market capitalization of $7.53 billion and annual revenue of $22.37 billion, represents a significant force in the fuel distribution sector. InvestingPro analysis reveals extensive financial metrics and insights available for both companies, helping investors make informed decisions about this strategic transaction.
The transaction, set to be executed via a plan of arrangement, is expected to deliver a 25% premium to Parkland shareholders based on the 7-day volume-weighted average price of Parkland shares and Sunoco units as of May 2, 2025. Shareholders have the choice of receiving C$19.80 in cash plus 0.295 common units of SunocoCorp, C$44.00 in cash, or 0.536 SunocoCorp common units, subject to proration and adjustments. According to InvestingPro analysis, Sunoco currently trades near its Fair Value, with analysts setting price targets between $61 and $68.
The Parkland Board has unanimously recommended shareholders vote in favor of the arrangement, highlighting the immediate value and potential future benefits, including dividend growth opportunities. The combined entity aims to become one of the largest independent fuel distributors in the Americas, with anticipated annual run-rate synergies of US$250 million by the third year post-closing. Sunoco currently offers an attractive dividend yield of 6.39% and maintains a FAIR financial health score according to InvestingPro, which offers comprehensive analysis through its Pro Research Reports covering 1,400+ US equities.
Sunoco has committed to maintaining a Canadian headquarters in Calgary and significant employment levels in Canada, demonstrating ongoing investment in Canadian operations. This includes the Burnaby Refinery and Parkland’s transportation energy infrastructure expansion plans.
The arm’s length negotiations between Parkland and Sunoco were overseen by the Company Special Committee, which concluded that the consideration reflects Sunoco’s highest price. Fairness opinions from Goldman Sachs Canada Inc., BofA Securities Inc., and BMO Nesbitt Burns Inc. supported the financial fairness of the transaction. This assessment aligns with the current analyst consensus, which maintains a bullish outlook on Sunoco with a "Buy" recommendation.
The meeting, scheduled for June 24, 2025, will also involve voting on the election of directors, the appointment of PricewaterhouseCoopers LLP as the auditor, an advisory vote on executive compensation, and a review of the fiscal year’s financial statements.
Parkland urges shareholders to review the Circular and vote before the deadline on June 20, 2025. The Circular and related materials are available on Parkland’s SEDAR+ profile and at ParklandSunoco.ca.
This announcement is based on a press release statement and contains forward-looking statements subject to risks, assumptions, and uncertainties. Parkland does not undertake to update any forward-looking statements unless required by securities laws.
In other recent news, Sunoco LP reported strong financial results for the first quarter of 2025, with an adjusted EBITDA of $458 million and a distributable cash flow of $310 million. The company also announced an increase in its distribution by 1.25% from the previous quarter to $0.896 per common unit. Sunoco’s strategic acquisitions, including Parkland Corporation for $9.1 billion and Tanquid for €500 million, are expected to bolster its presence in North America and Europe. Stifel analysts raised Sunoco’s stock price target to $66, maintaining a Buy rating, following the company’s Q1 results and the significance of its TanQuid acquisition in Germany. In contrast, Jefferies analyst Christopher Sighinolfi reduced the price target for Sunoco shares to $6.00, maintaining a Hold rating, citing potential legislative impacts on the company’s operations. Sunoco also expanded its credit facilities amid its acquisition activities, increasing its letter of credit sublimit to $250 million to support the Parkland acquisition. This financial restructuring aims to provide Sunoco with increased financial flexibility as it integrates new operations. These developments reflect Sunoco’s continued strategic focus and financial adjustments in response to market conditions.
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