Parkland Corp.'s largest shareholder will no longer have a seat on the fuel retailer's board after the recent resignation of two board members. A boat travels past the Parkland Burnaby Refinery on Burrard Inlet at sunset in Burnaby, B.C., on April 17, 2021.DARRYL DYCK/The Canadian Press
Parkland Corp. PKI-T is in a standoff with its largest shareholder over leadership of the fuel distribution company’s board, a fight analysts say could escalate into a battle for control of the business or a significant share sale.
Parkland is 20-per-cent-owned by Simpson Oil Ltd., a private, family-controlled company based in the Cayman Islands. Simpson Oil acquired the stake in 2018, as part of the sale of its Caribbean fuel distribution business to Parkland for a total of $2.35-billion.
Last week, two Simpson Oil-appointed directors at Parkland – Michael Christiansen and Marc Halley – resigned from the Calgary-based company’s board, seven months after being elected.
The two directors departed after the Parkland board refused to name one of Simpson Oil’s nominees as the company’s chair, according to two sources at Parkland. The Globe and Mail agreed not to identify the sources because they are not authorized to speak on board governance. Simpson Oil declined comment, through its lawyer.
Parkland shareholders elected financier Steven Richardson as chair in July, a move supported by Simpson Oil, after defeating an activist campaign.
On Wednesday, Simpson Oil said in a press release its directors’ resignations terminate two agreements that restrict the company’s rights to vote on its Parkland shares, effective March 31. The company said it plans to continue investing in the energy sector and “Simpson Oil may from time to time dispose of or acquire additional securities of Parkland.”
In response, Mr. Richardson said in a press release: “We have an independent board that has unwavering confidence in the company’s strategy and the management team’s capability to deliver shareholder value.”
“Simpson Oil is trying to exit both its governance agreement and its board nomination agreement, ultimately to have a more active voice,” said analyst Ben Isaacson at Bank of Nova Scotia in a report. He said the two agreements “effectively require Simpson Oil to either vote along with the directors or abstain, and cannot act as an activist or solicit bids for the company.”
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Parkland owns more than 4,000 gas stations and electric-vehicle charging terminals in 25 countries, along with On The Run convenience stores.
Last year, hedge fund Engine Capital LP pushed for the sale of the company’s refinery in Burnaby, B.C., and a share buyback. More than 90 per cent of shareholders, including Simpson Oil, rebuffed the hedge fund’s campaign.
Parkland’s share price rose 43 per cent over the past year. The Simpson Oil stake is currently worth $1.5-billion.
The directors’ departure and strong stock performance “increase the likelihood of the Simpson family selling down some of its shares,” said analyst Luke Davis at RBC Capital Markets in a report. “We believe it remains in the Simpson family’s best interest to manage potential sales strategically.”
Simpson Oil is a family-owned company founded in the 1970s by Sir Kyffin Simpson, an 81-year-old Barbados-born entrepreneur. Initially, Mr. Simpson built a network of auto dealerships throughout the Caribbean and South America. He introduced Suzuki Motor Corp. to the region, and also owned Mercedes-Benz and Rolls-Royce showrooms.
In 2005, Mr. Simpson acquired Shell PLC’s gas station and marina business in the Caribbean. Over the next 18 years, he purchased Exxon Mobile Corp.’s XOM-N Caribbean retail outlets and Shell’s aviation fuel business, building a business with 526 service stations in 23 countries, under the SOL brand.
Mr. Simpson sold SOL to Parkland for a total of $2.35-billion in two transactions – one in 2018 and the second in 2022. Mr. Simpson also sold his auto dealerships in 2023 to Britain’s Inchcape PLC.
Cars are a family obsession. Mr. Simpson’s 19-year-old grandson, also named Kyffin Simpson, is one of the youngest race car drivers on the U.S. IndyCar circuit and in European Le Mans races.
Andrew Willis