Dissident to fight board vote delay in court after Parkland, Sunoco sign US$9.1B deal

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CALGARY — Parkland Corp.’s biggest shareholder is going to court after the company announced a US$9.1-billion takeover by Sunoco LP and delayed a meeting where it was to face investors pushing for a boardroom overhaul.

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A showdown had been set to take place in Calgary on Tuesday, with shareholders voting on competing director nominee slates put forward by Parkland’s management and by Simpson Oil, which owns just under 20 per cent of the Canadian fuel retailer and refiner’s shares.

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“Delaying the meeting and pushing forward with any transaction ahead of board transition represents a clear breach of fiduciary duty — an obvious attempt to cling to power and sidestep shareholder will,” Simpson said in a statement Monday.

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Parkland and Cayman Islands-based Simpson have been at odds over the fuel refiner and retailer’s performance and governance for at least a year.

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Parkland’s annual meeting has been rescheduled to June 24, when shareholders will vote on the cash-and-stock deal with Dallas-based Sunoco that would create the largest independent fuel distributor in the Americas.

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Simpson says it has applied to the Alberta Court of King’s Bench to hold the annual meeting as planned, calling the delay a “deplorable tactic.”

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The dissident shareholder called on all 11 incumbent Parkland directors to resign, including executive chair Mike Jennings.

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The deal between Parkland and Sunoco announced Monday requires shareholder and regulatory approval and also has to be cleared under the Investment Canada Act. The U.S. company has committed to maintain a Canadian headquarters in Calgary, significant employment in Canada and investment in Parkland’s refinery in Burnaby, B.C.

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Parkland owns the Ultramar, Chevron and Pioneer gas station chains as well as several other brands in 26 countries. Sunoco outlets that had long operated in Canada were rebranded in 2009 under the Petro-Canada banner.

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“This combination with Sunoco provides Parkland’s shareholders with the highest value and the greatest proceeds, while also affirming Sunoco’s and Parkland commitment to Canada, a country that has played a vital role in our combined history,” said outgoing Parkland chief executive Bob Espey, who announced last month that he would step down before year-end.

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On a conference call, an analyst asked Sunoco CEO Joe Kim about potential issues with large Parkland shareholders, but did not name Simpson specifically.

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“For the Parkland shareholders, you get a very, very healthy premium, material cash and a stronger company underlying the equity going forward,” Kim replied.

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“So we think this is an offer that’s going to be hard for people to pass up.”

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Under shareholder pressure, Parkland said in March it would review options to boost its share price, including a sale of the entire company, an action it had earlier said was unnecessary.