Suncor Energy is exploring potential sale of its fuel retail business
The company has formed a committee to oversee the strategic review of Petro-Canada, its downstream business since 2009.
Last Monday, Suncor Energy announced it has reached an agreement with activist investor Elliott Investment Management LP that involves a strategic review of its operations. Part of this process includes the company’s fuel retail business, Petro-Canada, which has been in the scope of the investor for some time.
Conversations to achieve the deal started after Elliott pointed out a recent decline in performance of the energy producer, as reported by news site CBC. As stated by the firm, both parties agreed on three new independent directors to join the board to oversee its strategy and drive shareholder value.
“In addition, the board’s review of the retail business builds on our long-standing commitment to openly consider alternatives to enhance shareholder value and will help ensure the company is well positioned for even greater success and value creation in the future," stated Michael Wilson, Board Chair of Suncor, in an official statement.
The review will be supported by external advisors and explore alternatives on what to do with its retail operations. According to Suncor, both sale and enhancement of the business are currently being assessed as possible alternatives.
Suncor and Petro-Canada merged back in 2009 and its current network of fuel retail locations is composed of more than 1,500 service stations. As reported by Convenience Store News, there are two local companies that could act as potential buyers of the chain: Alimentation Couche-Tard Inc., owner of the Circle K brand, and Parkland Corp.
The first estimates from analysts determine that a potential sale of Suncor’s fuel retail business could mean an investment of nearly $7.7 billion. Although Couche-Tard’s infrastructure can support this acquisition, its top spot in the convenience and downstream sector in Canada could obstruct the deal due to anticompetition regulations.
