Engine Capital LP, a shareholder of Parkland Corp. that holds approximately 2.5% of its outstanding shares, is pushing for the fuel distributor and convenience retailer board of directors to conduct a strategic review and consider selling the company.
The request was first made earlier this month by Simpson Oil Ltd., Parkland’s largest shareholder.
On April 14, Parkland Corp. issued a statement in response to Simpson Oil’s request for a review and potential sale of the company. Parkland’s board of directors continuously evaluates opportunities to enhance and maximize shareholder value, the company said.
“The current call for a strategic review represents another attempt by Simpson Oil Ltd. to circumvent established corporate governance without considering the interests of all shareholders,” Parkland Corp. said. A strategic review is “unnecessary and does not consider the best interests of the majority of our shareholders.”
- Parklandis No. 38on CSP’s 2024 Top 40 Update to the 2023 Top 202 ranking of U.S. c-store chains by store count. Watch for the full 2024 Top 202 ranking in the June issue of CSP magazine and in CSP Daily News.
In a letter to Parkland’s board, Engine Capital said it believes a sale of the company “is likely to result in a transaction at a price that is superior to the present value of the current strategic plan, especially taking into account the execution risks.”
To thrive in the public markets, a company must optimize its operations, capital allocation and governance, according to Engine Capital, and Parkland has fallen short in these key areas, resulting in its stock trading at a significant discount to peers.
Parkland’s 5-year total share return is 21.6% compared to its peer group average from the same time frame, which was 210.9%.
Specifically, Engine Capital said that operationally, Parkland’s expenses have grown faster than its gross profit from 2019 to 2023, which is the opposite of what peer companies did.
The letter states that Parkland’s board should repurchase its undervalued shares today so that it has the option to pursue mergers and acquisitions after 2025 when it’s not clear recent M&A has created any value.
Engine Capital pointed out that the industry has experienced material M&A over recent years, and most public companies in the space have been swallowed by the large consolidators. The company noted the following four large transactions that have taken place in the space post-Covid.
- Aramco’s acquisition of Esmax Distribución SpA in March 2024.
- Berkshire Hathaway’s purchase of the remaining 20% of Pilot Travel Centers in January 2024.
- Murphy USA’s acquisition of QuickChek in January 2021.
- 7-Eleven’s acquisition of Speedway for in May 2021.
Engine concluded that the board should immediately initiate a strategic process to determine what one or multiple buyers would be willing to pay for Parkland’s assets.
Parkland Corp. is the parent company of Parkland USA, which has more than 200 company-owned convenience stores in the United States under brands including On the Run.
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