Dive Brief:
- Convenience and fuel retailer Parkland Corp. is looking to sell up to $500 million worth of non-core assets — including select retail sites — that no longer align with its business objectives, President and CEO Robert Espey said during the company’s earnings call Thursday.
- Parkland is in “advanced negotiations” to sell the first $200 million worth of these assets, which includes about $100 million of high-value real estate primarily located in urban areas, Espey said. Parkland hopes to receive the other $300 million from offloading other retail assets, particularly in Canada, that don’t generate a lot of cash flow, Espey noted.
- Parkland’s latest announcement comes amid increasing shareholder pressure, with investors pushing Parkland to split up the company as its stock price has fallen.
Dive Insight:
Last quarter, activist hedge fund Engine Capital — which owns 2% of Parkland’s stock — began pushing for the company to spin off non-core assets and turn Parkland into a “pure play” c-store company. Parkland subsequently announced it would allow its largest investor to nominate two people to the board, but the investor pressure continued.
In response to this pressure, Parkland said its management and board worked with a financial advisor to review strategic alternatives — including an outright sale or spinoff — for its refinery business. After the review, Parkland concluded that keeping its refinery and retail businesses under one roof would be the best bet to maximize shareholder value moving forward.
That review also resulted in Parkland’s decision to sell these non-core assets, which the company hopes will not harm its goal to grow its business to $2 billion in revenue, Espey said. The assets include select retail sites, as well as non-core logistics and Canadian commercial assets, according to Parkland’s earnings presentation.
Espey noted that selling these assets will take about one to two years to achieve, as the company is considering market demand, identifying potential buyers and negotiating favorable terms. He said that the cash generated by selling these assets will be used to reduce debt and increase overall shareholder value.
“I do want to assure people that these are good assets, and [a sale] will be dependent on getting a competitive price for these assets,” Espey said.
With 1,860 stores in its Canadian network, Calgary, Alberta-based Parkland is the largest independent fuel retailer and second-largest c-store operator in Canada. In the U.S., Parkland supplies fuel to independently owned gas stations and operates 212 c-stores under a variety of banners, including On the Run, Hart’s, Superpumper and KB Express.
