On May 5th the company announced that it has agreed to a takeover by Sunoco. The terms of the deal is cash and .295 shares of the new entity Suncorp.
My questions are two fold.
1. Is this new company, the old company renamed, or is this a spin off of the old company?
2. Assuming the deal goes through on June 24, how does the $44.00 price for each Parkland share work out, if the value of Suncorp is lower than the price of SUN at the time of the agreement?
3. That being said, do you expect the share price to rise to the value of the offer made, as the date of the vote nears?
4. Would you sell PKI if it gets to $44 or keep the shares of the new company?
The entity buying is Suncorp, and is a legally separate entity from Sunoco, but essentially a 'paired' company and economically equivalent. We believe this is being done because Sunoco is a limited partnership. Suncorp shares are guaranteed the same dividends as Sunoco LP for at least two years. 2) The cash/shares ratio will not change, but there will be a pro rata cash/share allocation depending on how many shareholders elect receive shares and how many cash. Most likely every shareholder will receive a combination unless they select all shares. BUT..if Sunoco shares decline the value of the renumeration will as well. We would expect PKI shares to slowly rise as we get closer to the deal closing, assuming all else (i.e. Sunoco shares) equal. SUN shares are cheap and offer a 6.37% yield. We want to see the offering circular (not out yet) to decide on future action, but for now we would be comfortable holding. With lots of other opportunities in Canada, though, we would likely be more inclined to sell at $44, unless it gets there via a third party entering this takeover.