Simpson Oil Ltd., which owns nearly 20 per cent of Calgary-based Parkland Corp., won a legal victory when the Ontario Superior Court ruled it is no longer bound by a 2019 governance agreement, which had prevented Simpson from engaging in any activism against Parkland or soliciting bids to acquire the company.Christopher Katsarov/The Canadian Press
Shares of Parkland Corp. PKI-T surged to their highest level in more than six months on Tuesday after the fuel retailer’s largest shareholder won a legal victory that could lead to a multibillion-dollar sale of the company.
Simpson Oil Ltd., which owns nearly 20 per cent of Calgary-based Parkland, won a legal victory Monday when the Ontario Superior Court ruled it is no longer bound by a 2019 governance agreement. That agreement had prevented Simpson Oil from engaging in any activism against Parkland or soliciting bids to acquire the company.
Simpson Oil, a family-owned business founded by Sir Kyffin Simpson and based in the Cayman Islands, openly called for Parkland to put itself up for sale in April, 2024. During the summer of 2023, Parkland rebuffed a takeover offer worth nearly $8-billion from Texas-based Sunoco LP.
Parkland stock climbed almost 10 per cent to $36.80 per share on Tuesday afternoon on the Toronto Stock Exchange, and at one point topped $37 for the first time since July, 2024. At that level, the company’s total market value is more than $6.4-billion.
“It’s hard to see how this isn’t good news for the shares,” Bank of Nova Scotia analyst Ben Isaacson said in a note to clients published Tuesday morning. “An unencumbered debate about how to best surface value can now unfold in the court of investor opinion.”
Mr. Isaacson said he expected to see Simpson Oil “become more vocal” about its vision and intentions related to Parkland over the coming weeks. That could include proposing a new slate of candidates for the company’s board of directors or pushing to sell the company outright, he said.
Parkland owns more than 4,000 gas stations and electric-vehicle charging terminals across Canada, the United States and the Caribbean, along with On the Run convenience stores and M&M Food Market. The company acquired most of its Caribbean presence from Simpson when it purchased the SOL refuelling chain in two transactions worth a combined $2.35-billion in 2018 and 2022.
Simpson Oil obtained its ownership stake in Parkland through those transactions, but the relationship quickly grew acrimonious.
In late 2023, two Simpson-appointed Parkland directors resigned after just seven months on the board. Michael Christiansen and Marc Halley left after Parkland refused to name one of them as the company’s chair, The Globe and Mail reported at the time.
Simpson Oil subsequently declared its governance agreement with Parkland invalid. Parkland repeatedly disagreed, but the court has now sided with Simpson Oil and Parkland said in a statement that the company “acknowledges” the legal decision.
“Parkland has always been open to representation from Simpson Oil on its board,” the company said. “This decision does not change that.”
Parkland declined to comment beyond that statement. The lawyer representing Simpson Oil did not respond to a request for comment.
The Simpson family earns tens of millions of dollars in annual dividends through its stake in Parkland. But as The Globe has previously reported, the family could earn tens of millions more if Parkland was sold to a master limited partnership (MLP) like Sunoco.
Sunoco, which is controlled by billionaire Kelcy Warren, has a current dividend yield of 6.15 per cent. Parkland, by comparison, has a current dividend yield of 3.78 per cent.
Amid the company’s continuing fight with Simpson Oil, Parkland has also been fighting an activist investor campaign from New York-based hedge fund Engine Capital LP. Engine owns roughly 2.5 per cent of Parkland and has been urging the company to cut costs and sell non-core assets.
Engine has previously expressed support for Simpson Oil’s call to sell Parkland. Arnaud Ajdler, Engine’s managing partner, said Parkland ended up wasting millions of dollars fighting Simpson Oil.
“This is the same board that rejected a $45 per share takeover offer without running a comprehensive strategic alternatives process,” Mr. Ajdler said in an e-mail. “These actions say a lot about the board’s priorities and the lengths it will apparently go to remain in power.”