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CALGARY, Alberta -- To complete the merger between energy companies Suncor Energy Inc. and Petro-Canada, Suncor must sell 70 of its Sunoco-branded service stations in Ontario, while 34 Petro-Canada stations will be sold after Suncor takes over Petro-Canada’s retail network, the Calgary Herald reported.
As reported in a CSNews Online newsflash yesterday, the measure was the final condition for Canada’s Competition Board to give a green light to the $40 billion merger, which formally took effect Aug. 1, the report stated. Suncor’s merger with Petro-Canada created the country’s largest integrated oil company, with 1,000 retail outlets stretching across Canada.
The locations slated for divesture were negotiated and agreed to with the consent of government representatives, who will appoint a monitor to oversee the sale, according to Suncor spokeswoman Victoria Barrington, who was quoted in the report. Suncor is required to make "reasonable commercial efforts" to sell those stations and terminals to qualified buyers during an initial sale period, which will be completed within an undisclosed period of time. Any unsold assets following the initial period will be divested at the discretion of an appointed trustee, the report stated.
All together, the 70 stations represent a quarter of Suncor's Sunoco-branded network, and the sale will bring the number of stations in Suncor's network to approximately 200. The vast majority of the sites slated for divesture are located in suburban Toronto. The agreement also requires Suncor to supply the divested stations with equivalent volumes of fuel at similar prices and terms, the Herald reported.
"We don’t have any further details of the divestiture," Barrington told the newspaper. "We are communicating with our retailers and will honor all existing contracts and agreements that are in place."
In addition, Suncor will not be able to re-acquire the divested stations directly or through subsidiaries for at least 10 years, the report stated. And the agreement prohibits Suncor from selling outlets to either Imperial Oil or Shell Canada.
The stations could be sold individually or packaged to smaller non-refining players, according to Michael Ervin, of Calgary-based consulting firm MJ Ervin and Associates. The 104 stations to be sold are "not a drop in the bucket" in the southern Ontario gasoline market, he added, and noted the divestiture process is somewhat unprecedented, given the lack of consolidation in Canada’s integrated oil and gas sector.
"It’s pretty rare because we haven’t seen two large downstream companies merge before," he told the newspaper.
Ervin told the Herald it’s unlikely that many, if any, independent retail fuel locations would be affected by the sale. "There are very few of those leasee operations left," he said. "They used to be a big part of the retail landscape 20 years ago, but not so much today."
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