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Parkland Corp. Rejects Call for Strategic Review

A review is not in the best interest of most shareholders, the company said.
Angela Hanson
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CALGARY, Alberta — Parkland Corp. is pushing back against an investor call for a strategic review, stating that such a review is unnecessary and does not consider the best interests of a majority of shareholders.

On April 12, Simpson Oil Ltd., Parkland's largest shareholder, sent a letter to Parkland's board of directors that called upon the board to immediately commence a review of strategic alternatives, including a potential transition of the company to new ownership.

[Read more: Parkland Sets Ambitious Goals Following Record Year]

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According to Simpson, significant value creation opportunities are available to an operator with the appropriate focus on prudent capital allocation, cost discipline, alignment of management compensation and strong corporate governance. It considers a strategic review essential to optimize Parkland's operational and financial performance.

"We have shared our concerns as long-term investors at both the board and shareholder level," Simpson wrote. "However, the company appears disinterested in constructive feedback or recommendations for improvement from shareholders. This has compelled us to change our approach to protect our investment and our shareholder rights."

Parkland announced its determination that a strategic review is unnecessary on April 15, calling Simpson's call an attempt to circumvent established corporate governance without considering the interests of all shareholders.

In late 2023, Simpson Oil nominees Michael Christiansen and Marc Halley stepped down from Parkland's board, leaving Simpson without a seat despite being Parkland's largest shareholder. Weeks later, investor Engine Capital LP expressed serious concern about the departures of Halley and Christiansen and called for a total refreshment of the board, as Convenience Store News previously reported.

Parkland stated that in 2023, while it still had nominees on the board, Simpson solicited a a potential sale of the company at a valuation "significantly below" its intrinsic value. Parkland then engaged legal and financial advisors and conducted a "thorough" evaluation of the proposed transaction. It also established a special committee and engaged its own independent advisors.

"After careful consideration, the board determined that pursuing this alternative would not serve the best interests of the company and its shareholders," said Steven Richardson, chair of the board. "Parkland's board fulfils its responsibilities for the benefit of all shareholders, not at the direction of one."

Parkland cited additional context for its determination that a strategic review is unnecessary, stating that the company's current strategy is successful and received strong support from a majority of shareholders during its 2023 investor day; that Simpson is in violation of a 2019 shareholder governance agreement; and that Parkland remains open to exploring opportunities that would deliver maximum value for all shareholders.

Calgary-based Parkland Corp. is an independent supplier and marketer of fuel and petroleum products and a convenience store operator. Parkland currently services customers across Canada, the United States, the Caribbean region and the Americas through three channels: retail, commercial and wholesale.

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