Parkland-Sunoco Deal: A Recipe for Shareholder Disaster?

Investors, buckle up. The Parkland-Sunoco merger is shaping up to be one of the most contentious deals of the year—and for good reason. Engine Capital, a vocal shareholder, has fired a warning shot across Parkland's bow, accusing the company's board of rushing a lopsided deal that leaves shareholders holding the bag. Let's break down why this merger reeks of poor governance, undervaluation, and a lack of transparency—and why you should think twice before backing it.

A Deal That Smells of Expediency, Not Fairness

First, let's talk about the speed of this deal. Sunoco first pitched its $44-per-share offer on April 18. By May 4—just 16 days later—the board had signed off. That's lightning-fast, especially when you consider that Parkland's CEO, Bob Espey, was set to exit the board anyway.

But here's the kicker: Espey stood to gain a $12.3 million severance package if he rubber-stamped the deal, nearly doubling his standard payout. That's a conflict of interest that stinks to high heaven. Engine Capital isn't just whining—it's pointing out that the board's haste and incentives suggest they were desperate to get this done, not to get the best price.

The Undervaluation Disaster

Now, let's talk cold, hard numbers. The $44-per-share offer sounds decent until you dig into the details.

First, the math: When adjusted for currency fluctuations and Sunoco's stock price, that $44 translates to just $41.60—a 5.5% discount. Worse, Parkland's shares closed at $38.73 on June 5, barely 6.7% above the pre-deal price. That suggests the market thinks this deal is a bust.

Engine Capital's “sum-of-the-parts” analysis? It argues Parkland's assets are worth $52.50 per share. Why? Because the deal's multiples—8.8x cash flow and 7x EBITDA—are way below industry norms. For example, similar post-2020 deals averaged 13.2x–13.7x EBITDA. Parkland's management even privately admits synergy estimates ($250 million) are likely too low.

And then there's the SUNCorp securities: 55% of the payment is in a new entity with no trading history. If SUNCorp trades at a 10% discount to Sunoco's units (which isn't unreasonable), that drops the effective price to $39.40—a 10% haircut from the headline offer.

The Transparency Black Hole

Here's where it gets shady. The board refused to share the financial assumptions behind its fairness opinions. No details on revenue projections, tax impacts, or SUNCorp's structure. Shareholders are being asked to trust a process that's as opaque as a lead-lined vault.

Even the tax implications of SUNCorp are a mystery. Without clarity on its dividend structure or long-term viability, investors are gambling with their money.

Engine Capital's Plan B: Split or Sink

Engine isn't just complaining—it's offering alternatives. Why not break up Parkland's assets? Its international division and Canadian operations could fetch $53 per share if valued properly. Or, resurrect Sunoco's 2023 offer ($18 per share + 0.443 Sunoco units), which would now equal $50.70—a far cry from $44.

The message is clear: Demand better terms or walk away.

Investor Action: Vote No and Stay Vigilant

If you own Parkland stock, here's what to do:

1. Vote against the deal at the June 24 shareholder meeting.
2. Revoke your proxy if you've already granted one to the board—they're clearly not acting in your interest.
3. Wait for a re-do. If this deal dies, pressure the board to start over with a fair process.

Meanwhile, stay away from Parkland's stock until this mess is resolved. The current offer is a steal—for Sunoco, not shareholders.

Final Verdict: A Deal That's Bad for Parkland, Great for Sunoco

This isn't about growth; it's about Sunoco paying a fire-sale price while Parkland's board cuts a sweetheart deal. Engine Capital's fight isn't just about money—it's about accountability.

Investors: Don't let them off the hook. Vote no, demand transparency, and let the market sort out Parkland's true value. Sometimes, the best move is to walk away—and that's exactly what shareholders should do here.

Stay tuned for updates on the June 24 vote. This isn't over yet.