The Canadian oil company Parkland Fuel Corporation said on Oct. 10 it will acquire 75% of the privately-held Simpson Oil Ltd. (SOL), said to be the largest independent fuel marketer in the Caribbean.
As part of the deal, the current owner of SOL, Simpson Group, will take a 9.9% stake in Parkland through its holding company SOL Ltd. and making it one of the dominant suppliers of fossil fuels to the Caribbean.
In press release issued from Calgary, Alberta, via Globe Newswire, the purchaser says it will acquire 75% of an entity called SIL for a total purchase price of US$1.21 billion, while SOL Ltd. will also get 12.16 million Parkland common shares, as well as retain that other 25%.
The company said the Simpson Group intends to remain a long-term investor in Parkland Fuel Corporation, said to be Canada's largest and one of North America's fastest growing independent marketers of fuel and petroleum products and a leading convenience store operator.
SOL supplies and markets a total of 4.8 billion liters of fuel volume annually across 23 countries in the Caribbean, including Barbados, and generated US$215 million in adjusted earnings before taxes, depreciation and amortization in the 12-month period ending June 2018.In giving reasons for making the purchase, Parkland President and CEO Bob Espey said SOL would extend Parkland’s global supply reach and supply advantage. SOL, he said, has built “a strong market position with unparalleled regional scale,” and together, Parkland and SOL would create a “significant North American and Caribbean growth platform.”
Sir Kyffin Simpson, founder of the Simpson Group, said he had “long admired Parkland as a company with their futuristic vision and energy, and I have been tremendously impressed with Bob Espey’s strong leadership along with his exceptional management team.”Although the merger provides Parkland an opportunity to roll out its private label, its loyalty program and what it termed its "enhanced food offer,” the company said the SOL operating brands would remain in place, and the SOL business “will retain key management and continue to be managed from the Caribbean.”
Closing of the Transaction is expected to occur in late Q4 2018.
Here’s a quick look at what Parkland is buying:
SOL’s infrastructure assets include 32 import terminals, 7 pipelines, 3 marine berths and 10 charter ships. as well as ownership of a 29% non-operating financial stake in the entity that owns and operates the SARA Refinery located in Fort-de-France, Martinique. The capacity of the SARA Refinery is 16,000 thousand barrels per day, and the refinery owns and operates all the pipelines, ships and terminals required to supply refined products to Guadeloupe, French Guiana and Martinique.
Meanwhile, SOL’s Commercial and Industrial Business represents approximately 1.8 billion liters of annual volume with operations in 21 countries; its lubricants segment represents 21 million liters of annual volume and operations in 18 countries; and its LPG (propane) segment represents 47 million liters of annual volume and operations in 10 countries.
SOL’s Aviation Business represents approximately 600 million liters of annual volume with operations in 13 countries mainly through joint ventures with various third parties, and jointly owns airport terminals and infrastructure in several markets.
Photo at top: The Simpson Oil building at Grantley Adams Industrial Estate, Christ Church, Barbados.