UPDATED: Sunoco LP (SUN-N) has made a bid to acquire Calgary-based Parkland Corporation (PKI-T) in a transaction valued at US$9.1 billion, but the deal is being opposed by Parkland's largest shareholder.

The transaction would fold Parkland's approximately 4,000 North American commercial and retail locations into Sunoco, which intends to form a company named SUNCorp, LLC as part of the deal. The proposed company would hold partnership units of Sunoco that are economically equivalent to Sunoco's publicly traded common units.

“Sunoco shares our commitment to growth, customer service, operational excellence, and ongoing investment in Canada, making our combined business stronger and better positioned for sustained success," Bob Espey, president and CEO of Parkland, said in the announcement.

If the deal closes, Parkland’s shareholders will receive 0.295 units of SUNCorp and C$19.80 per Parkland share, a 25 per cent premium over the seven-day average price of Parkland and Sunoco shares as of May 2. Alternatively, Parkland shareholders can choose to receive C$44 per Parkland share in cash or 0.536 SUNCorp units, subject to proration.

Sunoco will maintain a headquarters in Calgary with “significant employment levels in Canada,” the release said.

Parkland’s fuel station brands include Esso, Pioneer, Ultramar and Chevron. Its flagship convenience store brand is On the Run, with over 300 locations in Canada, according to its website.

The company is also committed to investing in Parkland’s transportation energy infrastructure and its refinery in the Lower Mainland of B.C. that produces low-carbon fuels. Opportunities for reinvestment in Canada, the U.S. and the Caribbean will be opened up as part of the combined company.

The transaction for the Canadian fuel distributor and convenience retailer includes assumed debt.

“This strategic combination is a compelling outcome for Parkland shareholders,” Michael Jennings, Parkland's executive chair, said in the announcement. “The board unanimously recommends the proposed transaction, recognizing Sunoco’s commitment to safeguarding Canadian jobs, retaining the Calgary head office, and further investing in Canada.”

Largest shareholder Simpson Oil opposes the deal

Simpson Oil Ltd., the largest shareholder of Parkland with 19.8 per cent of its shares, immediately filed a legal challenge to the bid in Alberta. It called the planned acquisition an attempt to delay a shareholder vote at Parkland’s annual general meeting, which had been scheduled for Tuesday. The bid was denied.

Shareholders at the meeting were to have voted on opposing director nominee slates put forward by Parkland and Simpson. At stake in that vote was control of the company's future direction.

The annual general meeting is now scheduled for June 24 and will include a vote on the Sunoco acquisition proposal.

In a release, Simpson called on Jennings to resign, along with all incumbent directors. The company accused Jennings of “poor decision making” which led to “value destruction”, and the board as having a “deplorable track record of governance”.

“With a board transition imminent, no material action should have been taken until new, shareholder-supported directors were in place,” Simpson said in a release. The company called for the annual general meeting to proceed as scheduled.

Parkland’s initiation of the transaction

Dallas-based Sunoco took an interest in Parkland because of the potential for quick growth and the complementary assets that provides “advantaged fuel supply and further diversifies Sunoco's portfolio and geographic footprint.”

Sunoco, an energy infrastructure and fuel distribution company operating in the U.S., Europe, Mexico and Puerto Rico, serves approximately 7,400 Sunoco and partner branded locations, along with independent dealers and commercial clients.

According to the release, Parkland’s board of directors reviewed options to maximize value for shareholders on March 5. The move led to further discussions with Sunoco, which resulted in the acquisition bid.

The special committee formed for the review made a unanimous recommendation for the decision, and Parkland’s board of directors was also unanimous in its approval.

The transaction will require approval from Canada's federal government, in light of the ongoing trade and tariff battles with the U.S. President Donald Trump's administration.