In a letter to directors, Engine Capital called on Parkland to unload its refinery and fuel supply operations to focus on gas stations and convenience stores
that would see the company’s refinery and fuel distribution businesses sold or spun-off to create a “pure play” fuel and convenience-store retailer.
Engine Capital, which has US$750 million in assets under management, said it owns approximately two per cent of Parkland’s shares, a position it began to acquire last year.The company’s shares have been under intense pressure since the start of the pandemic as remote work led to fewer commuters on the road. At the same time the company has faced questions about its fossil fuel exposure amid a global push towards a low-carbon economy.
The letter highlighted the “staggering” outperformance of Couche-Tard. The Laval, Que.-based company has seen its shares climb more than 50 per cent since January 2020., operating nearly 2,000 stores in Canada under brands like On the Run, Ultramar, Pioneer and Chevron, and hundreds more in the U.S. and the Caribbean. It also owns frozen prepared food retailer M&M Food Market, which it acquired in early 2022.
Engine Capital estimated that based on a valuation multiple of 8.5 times earnings before interest, taxes, depreciation and amortization for Parkland’s retail business, and five times EBITDA for its refinery and fuel supply business, the company’s share price would be $45, a 55 per cent premium.
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