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ALBERTA, Canada — Parkland Fuel Corp. is expanding its reach in Ontario by acquiring the assets of Pioneer Energy for $378 million.
Pioneer's network of 393 gas stations includes 152 company-operated and 241 independent dealer stations. With the definitive agreement, Parkland adds 319 gas stations in Ontario and 74 gas stations in Manitoba, increasing its national footprint to more than 1,000 gas stations, or roughly 9 percent of the Canadian retail fuel market.
In addition, the deal includes 148 Pioneer-branded and 228 Esso-branded gas stations, many of which are in prime urban locations.
"We have long recognized the Ontario retail marketplace as a critical growth opportunity for Parkland, aligning with Parkland's overarching supply strategy. We also recognize Pioneer Energy as one of Canada's most respected independent retail fuel marketers, having built Pioneer into the strongest independent retail fuel brand in Ontario. Given The Pioneer Group's sophisticated understanding of the retail fuel industry, their investment in Parkland is a strong endorsement of our strategy, and we look forward to welcoming their team," said Bob Espey, president and CEO of Parkland.
Pioneer distributes more than 2 billion liters of fuel annually through its 393 gas stations and a recently acquired commercial operation in Ontario, New Brunswick and Nova Scotia. Pioneer currently distributes 5.1 percent of the total retail fuel volume across Canada and has a 12-percent share of the Ontario and Manitoba retail gas markets.
The acquisition price tag, which is in Canadian dollars, includes $259 million in cash, $119 million in common shares of Parkland, and the assumption of standard operating liabilities.
Integration of Pioneer operations into Parkland's portfolio is expected to occur over the course of 24 months.
Pioneer is jointly owned by The Pioneer Group Inc. and Suncor Energy Inc. As part of the definitive agreement, The Pioneer Group will receive $76 million or 39 percent of its total consideration in cash, and $119 million or 61 percent of its total consideration in common shares of Parkland. One-third of the common shares held by The Pioneer Group will be subject to a one-year minimum holding period, and the remaining two-thirds are subject to a two-year minimum holding period. Suncor Energy Inc. will receive $183 million in cash.
Tim Hogarth, CEO and executive chairman of Pioneer, is expected to be appointed to Parkland's board of directors upon completion of the deal.
"I want to thank everyone in the Pioneer family for their tremendous work and dedication over the years in making Pioneer a great success and one of Canada`s most respected independent fuel marketers," Hogarth said. "The Pioneer Group chose to invest the majority of its proceeds in Parkland because of our long-term industry commitment and belief in Parkland's ability to continue its aggressive growth path."
Including this acquisition, Parkland has successfully added 6 billion liters in petroleum volume, $115 million in annualized EBITDA through acquisitions and their associated synergies, and $11 million from the Give Me Five! initiative since 2011. With the Pioneer acquisition, Parkland is expected to attain its goal to add $125 million in additional adjusted EBITDA by 2015, a full year earlier than expected.
"Our five-year growth plan has progressed rapidly as a result of our team's ability to identify and execute disciplined transactions. We continue to anticipate additional accretive acquisitions, adhering to our disciplined approach to growth," Espey said.