Parkland under pressure again from U.S. activist hedge fund

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Canadian fuel retailer Parkland Corp. remains under pressure from activist investors despite acquiescing earlier this month to repeated shareholder calls to conduct a strategic review of its options, including the potential sale of the company.

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New York-based activist hedge fund Engine Capital LP, which owns a 2.5 per cent stake in Calgary-based Parkland, said current board members could not be trusted to carry out the strategic review and called for a complete overhaul of the company’s board.

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“(I)t is clear that the board has failed in its core responsibility to act in the best interests of shareholders and therefore cannot be trusted to oversee the strategic review,” it said in a statement on Monday. “We firmly believe that a comprehensive reconstitution of the board, including the appointment of shareholder representatives and qualified independent directors, is necessary to ensure a thorough evaluation of all paths to delivering enhanced shareholder value.”

Engine pointed to Parkland’s missed 2024 earnings targets and accused the firm’s board of failing to hold management accountable for underperformance.

It also repeated a criticism that has previously been levelled at Parkland’s board for its reported rejection of a takeover offer made in 2023.

“Parkland’s board refused to engage with a credible strategic party who reportedly submitted a premium takeover offer in the summer of 2023,” Engine said.

Parkland did not respond to questions about Engine’s claims on Monday, but the company on Tuesday announced it was adding two new independent directors to its board.

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“These appointments mark the latest step in Parkland’s ongoing commitment to strong governance and a rigorous, ongoing board renewal process, which has prioritized recruiting directors with deep industry and executive expertise,” the company said, adding it has now added six independent directors to its board in the past two years.

Parkland, which owns gas and convenience stores under the On the Run, Chevron and Fas Gas Plus brands, as well as the Burnaby Refinery — rebuffed calls last April from Engine and major shareholder Simpson Oil Ltd. urging the company to consider putting itself up for sale as part of a strategic review of options.

Simpson Oil, which owns nearly 20 per cent of Parkland’s shares, recently won a legal dispute with Parkland over its activism. Cayman Islands-based Simpson Oil in February said a shift away from Parkland’s current strategy was “overdue.”

Earlier this month, Parkland invited Simpson Oil to rejoin the company’s board and participate in the review.

“It is unfortunate (Simpson Oil) remains unwilling to engage in constructive dialogue,” Parkland chief executive Bob Espey said during its recent fourth-quarter conference call with investors. “Our offer to join our board remains open and we would welcome them to participate in the strategic review process.”

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The latest pressure from shareholders comes amid broader economic turmoil caused by United States President Donald Trump‘s threats to impose sweeping tariffs on Canadian goods, including energy.

U.S. tariffs could potentially lower Parkland’s input costs at its Burnaby Refinery if Canadian crude prices were to further discount, Espey said during the conference call, though he said an economic slowdown could contribute to lower demand overall.

Uncertainty caused by the trade dispute could also complicate matters for the company’s planned strategic review, since corporate dealmaking is expected to slow in 2025.

Parkland confirmed its annual general meeting of shareholders is scheduled for May 6.

• Email: mpotkins@postmedia.com

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