Canada’s Suncor open to selling gas stations after deal with activist investor

The Suncor Energy logo is seen at its headquarters in Calgary, Alberta, Canada, April 17, 2019. REUTERS/Chris Wattie

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July 18 (Reuters) – Suncor Energy Inc (SU.TO) said on Monday it had added three new independent directors and would consider a possible sale of its retail service station business, as part of an agreement with the investor Elliott Investment Management activist.

Canada’s second-largest crude oil producer came under pressure from Elliott over its operational and safety record, and Suncor chief executive Mark Little quit earlier this month. Read more

Elliott, which owns about 3% of Suncor, urged the company to recruit new directors and undergo a management and strategy review. read more The investment company could not be reached for comment.

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Suncor owns Petro-Canada, a network of 1,800 retail and wholesale gas stations across Canada.

Shares of Calgary, Alta.-based Suncor rose 2.4% amid broader gains for oil companies on Monday.

“The headline will grab headlines, but is it best for them in the long run (to sell retail)? Probably not,” said Darren Sissons, vice president and partner at Campbell, Lee & Ross, a shareholder of Suncor. .

Selling the retail business would reduce Suncor’s diversification, Sissons said.

Bidders for this venture will likely include Alimentation Couche-Tard Inc (ATD.TO) and Seven & i Holdings Co Ltd (3382.T), better known as 7-Eleven, said Brian Madden, chief investment officer at First. Avenue Investment Counsel. , shareholder of Couche-Tard.

“They’d be crazy not to (bid). It’s a trophy asset,” Madden said.

Couche-Tard and 7-Eleven could not immediately be reached for comment.

Private equity and infrastructure funds are also likely to be interested, a source familiar with the matter said. The source, who spoke on condition of anonymity, said Elliott was pleased to have largely met its targets thanks to changes announced by Suncor on Monday and since the activist investor revealed its demands in April.

Suncor’s retail business could be worth between C$5 billion ($3.86 billion) and C$8 billion ($6.18 billion), National Bank analyst Travis Wood said.

Little, the former CEO of Suncor, said in May that the company was not interested in selling the unit.

Suncor said it will provide an update on the strategic review in the fourth quarter.

BIGGER BOARD

Suncor has named industry veterans Ian Ashby, Chris Seasons and Jackie Sheppard as new independent directors. Seasons and Sheppard will oversee the strategic review and make a recommendation in addition to joining Suncor’s search committee for a permanent CEO.

With the changes, Suncor’s board will grow to 13 members, the company said, adding that two current directors will retire by the end of the year.

Little resigned as CEO of Suncor after the death of a worker at the company’s Oilsands Base mine in northern Alberta.

The death was the fifth at a Suncor site since 2019, when Little became CEO, and the thirteenth since 2014, by far the worst safety record among Canadian oil producers. Read more

($1 = 1.2950 Canadian dollars)

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Reporting by Rod Nickel in Winnipeg and Ruhi Soni in Bangalore; additional reporting by David French; Editing by Maju Samuel and Paul Simao

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