Simpson Oil backs Sunoco’s $9.1bn acquisition of Parkland, tilting outcome ahead of June 24 vote

Simpson Oil Limited, the Cayman Islands-based energy investor and Parkland Corporation‘s largest shareholder, has officially announced its support for the proposed US$9.1 billion acquisition of Parkland by Sunoco LP (NYSE: SUN). In a public statement issued on June 6, 2025, Simpson Oil confirmed it would vote its entire 19.8 percent stake in favor of the transaction, significantly boosting the odds of deal approval ahead of Parkland’s shareholder meeting scheduled for June 24 in Calgary.

The acquisition, first announced on May 5, would combine Parkland’s expansive Canadian retail and refining network with Sunoco’s U.S.-based logistics and fuel distribution operations under a new Delaware-headquartered entity called SUNCorp. Shareholders of Parkland Corporation (TSE: PKI) will be given the option of receiving cash, shares in SUNCorp, or a mix of both, with the blended offer representing a 25 percent premium over Parkland’s trading price at the time of announcement.

Why does Simpson Oil’s support change the trajectory of this deal?

As Parkland’s largest shareholder with beneficial ownership of 34.4 million common shares, Simpson Oil’s endorsement significantly alters the calculus heading into the vote. The firm, a subsidiary of Cayman-based investment holding company The Simpson Group, has been a vocal shareholder since 2017. Its backing is seen as a direct rebuke of Parkland’s current leadership, which it has previously criticized for governance lapses and strategic underperformance.

Simpson Oil’s public letter included unusually strong language for a supportive announcement, stating that a combination with Sunoco LP would allow Parkland to “benefit from operating under a first-class management team” while resolving “lamentable governance and performance issues.” The firm also emphasized that Parkland shareholders would retain upside exposure to the new entity through SUNCorp units, underscoring the potential for long-term value creation.

Industry observers noted that this endorsement likely removes the single most influential voting block from the undecided category and increases pressure on other institutional shareholders to take a stance. Analysts at National Bank of Canada previously estimated Simpson Oil’s vote as “decisive,” noting its potential to act as a bellwether for passive and ETF stakeholders.

What are the deal terms and strategic rationale?

Under the proposed transaction, Parkland shareholders can choose between three options: (1) C$19.80 in cash and 0.295 SUNCorp units per share; (2) C$44 in all-cash consideration; or (3) 0.536 SUNCorp units per Parkland share. This structure allows flexibility for income-focused, growth-oriented, or hybrid investors. The premium is based on Parkland’s share price of approximately C$35.20 at the time of deal announcement.

The new SUNCorp will be listed on both the NYSE and TSX, and will retain Parkland’s Canadian operations, including its refinery in Burnaby, British Columbia. Sunoco LP plans to integrate Parkland’s operations into its broader North American fuel supply chain, creating what it describes as “the largest independent fuel distributor in the Americas.” Synergies are expected to exceed US$250 million annually by the third year of integration, primarily from procurement consolidation, logistics optimization, and back-office streamlining.

Sunoco also emphasized that Parkland’s leadership and operations in Canada will remain intact. Calgary will continue to house key Canadian management teams, and the Burnaby refinery—critical to Western Canada’s low-carbon fuel supply—is slated for continued investment.

How have Parkland and Sunoco stocks reacted?

Following the initial deal announcement, Parkland Corporation (TSE: PKI) saw a sharp upward reaction in trading. Shares jumped over 8 percent to trade near C$39.40 in early May, reflecting investor optimism about the proposed premium and strategic clarity. In contrast, Sunoco LP (NYSE: SUN) experienced a mild selloff, with shares dipping 2–3 percent as some U.S. investors expressed short-term concerns about leverage and integration risks.

As of the week ending June 7, 2025, Parkland’s shares continue to trade at a discount to the blended offer value, suggesting lingering market uncertainty around deal closure. Simpson Oil’s support may help narrow that arbitrage gap in the days leading up to the June 24 vote, particularly if other institutional stakeholders signal alignment.

Market sentiment remains mixed for Sunoco LP. While U.S. investors have expressed caution over capital expenditure commitments and cross-border regulatory hurdles, several Canadian fund managers have upgraded Parkland to “accumulate” on the basis of the deal’s risk-adjusted return.

What opposition does the transaction still face?

Despite the Simpson Oil endorsement, not all shareholders are aligned. New York-based Engine Capital, which holds a 2.5 percent stake in Parkland, has publicly criticized the sale process as “rushed and opaque.” The activist investor argues that Parkland’s assets, particularly its refining and retail footprint, are being undervalued and that a longer, open-ended strategic review could have yielded a higher bid.

Furthermore, Simpson Oil itself has previously been involved in legal proceedings against Parkland’s board, alleging breaches of fiduciary duty in delaying a special shareholder meeting. While this litigation remains unresolved, it is unclear whether Simpson’s support for the deal will result in a formal withdrawal of those legal claims.

Another layer of complexity involves regulatory approval. The acquisition will undergo scrutiny under the Investment Canada Act, as well as competition law frameworks in both countries. Although not considered a national security concern, the foreign control of critical fuel infrastructure may prompt political commentary or require conditions related to job preservation and Canadian operations.

Institutional sentiment and buy/sell guidance

Institutional sentiment has turned cautiously constructive following Simpson Oil’s announcement. Analysts at BMO Capital Markets and Scotiabank view the development as a “turning point,” with both brokerages maintaining outperform ratings on Parkland and assigning C$43–C$45 price targets. Canadian pension funds with legacy exposure to Parkland, such as CPPIB and Caisse de dépôt, have yet to publicly declare their intentions.

Retail investors should weigh short-term merger arbitrage opportunities against longer-term exposure to the integrated SUNCorp entity. Should the vote fail, Parkland’s shares could revert to pre-announcement levels or face further board-level turbulence. Conversely, successful closure may lead to capital returns and operational efficiencies under Sunoco’s historically disciplined M&A strategy.

Sunoco’s stock is expected to remain range-bound until deal clarity improves. Some analysts suggest that SUN may eventually pursue further logistics acquisitions in the U.S. Gulf Coast or expand its renewables distribution assets to balance its downstream-heavy portfolio.

What comes next for shareholders?

The Parkland–Sunoco deal is scheduled for a shareholder vote on June 24, 2025. Proxy advisory firms such as ISS and Glass Lewis are expected to issue their formal voting recommendations in the coming days. These opinions, while non-binding, often carry significant weight with institutional investors and ETFs.

If the vote passes and regulatory approvals proceed as anticipated, closing is expected in the second half of 2025. At that point, SUNCorp would become operational, with joint oversight from both legacy Parkland and Sunoco leadership teams. Investors will then begin evaluating post-merger performance, integration execution, and dividend strategy.

Simpson Oil’s endorsement may not eliminate all obstacles, but it significantly shifts momentum in Sunoco’s favor. As deal momentum accelerates, the focus will turn to final shareholder alignment and the smooth formation of a transcontinental downstream energy leader.