RED DEER, Alberta -- Parkland Fuel Corp. has announced the closing of its acquisition of the assets of Pioneer Energy. It has acquired 181 Pioneer corporate gas stations and 212 supply agreements in Ontario and Manitoba, subject to qualifications set forth by the Competition Tribunal of Canada.
The company completed the acquisition on June 25, 2015, for an aggregate purchase price of $377 million (Canadian; $305.1 million U.S.), including $258 million ($208.8 million U.S.) in cash, $119 million ($96.3 million U.S.) in common shares of Parkland and the assumption of standard operating liabilities, subject to customary adjustments.
"I am excited to officially welcome Pioneer, its people and its partners to the Parkland family. Our new stronger company reflects the hard work and contributions of many employees from both organizations," said Bob Espey, president and CEO of Parkland. "The acquisition is a significant achievement for Parkland and demonstrates our disciplined approach to growth. We look forward to pursuing other accretive acquisition opportunities of this quality."
Parkland has appointed Ian White to lead the operations of Pioneer upon closing. White joins Parkland from Dollar Financial Group, where he was the head of its Canadian subsidiary, National Money Mart Co. Prior to this, White was responsible for the operating oversight of Canadian Tire's national portfolio of 285 gas stations and served as the divisional vice president of operations and business development in the petroleum division. White also held oversight of other business units while at Canadian Tire.
On May 29, 2015, the Competition Tribunal of Canada issued an interim order in respect of the application by the commissioner of competition that permitted Parkland to close the deal.
The order requires that the Pioneer supply agreements with independent dealers and Pioneer-owned corporate sites in six local communities are to be held separate from Parkland's other assets and operations and be managed by an independent third party.
The order will continue in effect until the commissioner's application challenging Parkland's acquisition of Pioneer's assets in 14 communities is resolved or until there is an agreement with the commissioner in respect of these six communities. Parkland will pursue negotiations with the commissioner with the objective of resolving his concerns in 11 of the 14 communities (including the six communities subject to the order) in a manner consistent with its previously announced proposal to divest certain limited assets, and consistent with the invitation by the tribunal to consult with the commissioner to reach an agreement about these six communities. At the same time, Parkland will continue to "vigorously contest" the commissioner's application before the tribunal in the communities where there is no resolution of the dispute.
Parkland estimates that the total volume of fuel for the Pioneer stations in the six local communities identified by the tribunal's hold-separate order is no more than 37 million liters (9.8 million gallons) of fuel which represents 2% of the total volume acquired.
In connection with the acquisition, Parkland has also entered into an agreement with Pioneer providing that Parkland will not, directly or indirectly, in any capacity, own, operate, control or otherwise be involved with the commercial assets of Pioneer or the operations thereof in Ontario, New Brunswick and Nova Scotia. The Pioneer commercial assets will continue to be owned, operated and controlled solely by Pioneer and its employees and Pioneer has commenced a strategic review and evaluation of opportunities for Pioneer to sell the assets to a third party in one or more transactions.
Under the agreement, Parkland will have an indirect economic interest in the Pioneer commercial assets and any proceeds. The assets represent approximately 220 million liters (58.12 million gallons) of fuel volume.
Also, Tim Hogarth, most recently chairman and CEO of Pioneer, has been appointed to Parkland's board.
"Mr. Hogarth is a prominent member of Canada's retail gasoline industry," said Jim Pantelidis, chairman of the Parkland board. "We are confident that his experience as an entrepreneur and champion of the Pioneer brand will bring valuable perspective to our Board and benefit the shareholders of Parkland."
Hogarth joined Pioneer in 1984 and served in progressively senior roles, ultimately becoming the president and CEO in 1998. Under his leadership, Pioneer became Canada's largest private independent fuel marketer.
Red Deer, Alberta-based Parkland Fuel is a leading North American distributor and marketer of fuels and lubricants. It delivers gasoline, diesel, propane, lubricants, heating oil and other petroleum products to motorists, businesses, households and wholesale customers in Canada and the United States.
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