(Bloomberg) -- Parkland Corp. is examining possible asset sales after activist hedge fund Engine Capital LP released a letter saying the fuel seller should get out of businesses not directly related to roadside stations.
The Canadian company is “examining opportunities for dispositions where it creates strong returns” for shareholders, Parkland said in a release. Parkland also announced that Simpson Oil Ltd., holder of more than 19% of issued and outstanding Parkland shares, now has the right to designate two nominees for election to the Board of Directors in an agreement entered into Tuesday.
Engine, owner of 2% of shares, released a letter early Wednesday criticizing Parkland’s aggressive acquisition strategy of recent years, arguing the company now controls a range of assets not normally owned by pure-play fuel and convenience chain operators, complicating the business and resulting in an undervalued share price.
Engine sited as examples the company’s ownership of a refinery in British Columbia as well as low-growth heating oil and propane distribution businesses. Parkland should immediately explore the sale or spinoff noncore assets to become more focused on the fuel and food retailing business, Engine said.
Parkland owns about 4,000 stations in Canada, the US and Caribbean and has purchased assets internationally including, most recently, a refinery in British Columbia and Canadian frozen-food retailer M&M Food Market.
Parkland shares rose more than 10% on Wednesday after the letter was released.
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