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Suncor Energy Inc. SU-T will explore a multibillion-dollar sale of its Petro-Canada gas station network after appointing three new directors in a corporate shakeup triggered by U.S. activist hedge fund Elliott Investment Management Inc.

The changes at Canada’s largest oil sands producer follow the departure this month of Mark Little as chief executive officer. Mr. Little resigned after a worker was killed in an accident at Suncor’s base plant in northern Alberta, the latest in a string of fatalities that Elliott had highlighted as a problem of corporate culture. Lapses in safety and unreliable operations are among reasons the company has lagged its peers, the activist asserted.

Under an agreement with Elliott, announced Monday, Suncor will proceed with a “strategic review” of its retail network “with the goal of unlocking shareholder value.” One of the options is the sale of the business, known for its maple leaf banner. One investment dealer, National Bank Financial, has estimated the unit’s value at $5-billion to $8-billion, depending on market conditions.

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Other oil companies, including Imperial Oil Ltd. IMO-A, Chevron Corp. CVX-N and Cenovus Energy Inc. CVE-T, have all divested their gas stations, selling them to retailers such as Parkland Corp. PKI-T, Alimentation Couche-Tard Inc. ATD-T and 7-Eleven. When asked previously about Petro-Canada, Mr. Little had ruled out a sale, saying the nationwide business – a unit of the onetime Crown corporation – was part and parcel of the continent’s best refining and marketing operation.

Elliott pegged a potential sale price for Petro-Canada at $4.7-billion to $9-billion when it launched its campaign to force change at Suncor in April. It has been in talks with the company since then.

National Bank analyst Travis Wood said he agrees Suncor is in need of change at the corporate level to improve prospects, but he does not believe the route to improved value is a sale of Petro-Canada, as the business is a solid contributor to its integrated structure. “Instead, we only see Suncor’s once-premium multiple reemerging after at least one year of superb oil sands execution, all else equal,” Mr. Wood wrote in a research note.

Suncor shares rose 1 per cent to close at $39.74 on the Toronto Stock Exchange on Monday, and are up 25 per cent since the start of the year. Prior to Elliott’s public advance, Suncor stock had underperformed its rivals, such as Canadian Natural Resources Ltd. CNQ-T, Cenovus and Imperial, over the previous two years.

In their initial letter to Suncor’s board of directors, Elliott partner John Pike and portfolio manager Mike Tomkins criticized the company’s record of missed production targets, high costs, employee fatalities and safety concerns stemming from what they said was “a slow-moving, overly bureaucratic corporate culture.”

Elliott, founded by U.S. activist investor Paul Singer, had a 3.4-per-cent stake in Suncor. Officials declined to say if that interest has changed in recent weeks. Under the agreement, Elliott cannot control more than 9.9 per cent of Suncor’s shares.

Suncor said it had appointed Canadian oil patch veterans Jackie Sheppard and Chris Seasons, as well as former BHP Billiton executive Ian Ashby, to its board. Ms. Sheppard is best known for her years as executive vice-president, corporate and legal affairs, with Talisman Energy Inc. Mr. Seasons is a partner at private equity firm ARC Financial Corp. and is the former president of Devon Canada.

Ms. Sheppard and Mr. Seasons, along with fellow director Russ Girling, will oversee the review of options for the Petro-Canada retail business, a process expected to be completed in the fourth quarter. Ms. Sheppard and Mr. Seasons will also join the board committee in charge of searching for a new CEO. Analysts and investors have said it is likely the successful candidate will be named from outside the company, given the need for the cultural change.

“The top priority for Suncor’s leadership team is forging ahead with our plans to improve our safety and operating performance,” Kris Smith, the company’s interim chief executive, said in a statement.

The agreement with Suncor gives Elliott the right to nominate another director if the company’s shares underperform its major oil-sands-industry peers by 10 per cent or more by the end of the year. If that happens, Elliott will have been successful in its aim to have five new directors appointed, because the new CEO will also have a seat.

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