Sunoco Fuels Up With $9.1B Parkland Deal, Eyes 10% Cash Flow Bump

Sunoco LP SUN shares are trading lower on Monday after the company agreed to acquire Parkland Corporation PKIUF in a deal valued at approximately $9.1 billion, including debt.

The transaction, announced Monday, involves a mix of cash and equity and will create a new entity calledSunoco LP SUN shares are trading lower on Monday after the company agreed to acquire Parkland Corporation PKIUF in a deal valued at approximately $9.1 billion, including debt. SUNCorp, LLC.

Parkland operates as a major fuel distributor and convenience retailer across 26 countries in the Americas. With around 4,000 locations, it serves both consumers and businesses with fuel and energy solutions, including renewables, EV charging, and carbon credit options.

Parkland investors will receive C$19.80 in cash and 0.295 SUNCorp units for each share they own. Alternatively, shareholders can choose between C$44.00 in cash or 0.536 SUNCorp units, though the final allocation will be adjusted to ensure the total deal value aligns with the originally announced limits.

To fund the transaction's cash portion, Sunoco has secured a $2.65 billion bridge loan with a 364-day term.

Also Read: Shell Q1 Profit Jumps 52%, Launches $3.5 Billion Stock Buyback

The boards of both companies have unanimously approved the transaction, which is expected to close in the latter half of 2025, pending regulatory clearance and shareholder approval.

Sunoco projects the acquisition will deliver over 10% accretion to distributable cash flow per unit and produce $250 million in annual synergies within three years.

The combined company expects increased free cash flow, enabling further reinvestment across the U.S., Canada and the Caribbean.

The company also expects to return to its target leverage ratio of 4x within 12 to 18 months after the deal closes. Sunoco held $181.8 million in cash and equivalents as of March 30.

SUNCorp will become a publicly traded Delaware-based LLC and hold units equivalent in value to Sunoco's current common units. For two years following the deal's closure, holders of SUNCorp units will receive dividend equivalents matching Sunoco's distributions.

The deal includes assurances from Sunoco to preserve and enhance Parkland's operations in Canada. The Calgary-based headquarters will remain, with a major part of the local employment maintained.

Sunoco also pledged continued investment in Parkland's Burnaby Refinery, which produces low-carbon fuels, and support for expanding Canadian energy infrastructure.

Price Action: SUN shares traded lower by 1.62% at $57.00 in premarket at last check Monday.

Read Next: