Suncor Energy Inc. is selling 70 of its 272 retail locations in Ontario, and 34 Petro-Canada stations also will be sold, as part of the final terms of an agreement filed under the Competition Act, which allows Suncor to acquire Petro-Canada’s retail network, the Calgary Herald reported.
The agreement was the final condition of the Competition Board’s approval for the $40-billion merger of the two companies that formally took effect Aug. 1.
Also under the consent agreement, Suncor must supply the sold stations with equivalent volumes of refined products at similar prices and terms.
In addition, Suncor won’t be able to re-acquire the sold stations through any direct or arm’s length subsidiaries for at least 10 years.
Suncor Spokeswoman Victoria Barrington, said the locations were negotiated and agreed to with the consent of government representatives, who will appoint a monitor to oversee the sale. Suncor must make “reasonable commercial efforts” to sell the identified stations and terminals to qualified buyers during an initial sale period, the duration of which was not disclosed. Any “residual assets” that remain unsold following the initial period will be disposed of at the sole discretion of an appointed trustee, she noted.
“We don’t have any further details of the divestiture,” Barrington told the Calgary Herald. “We are communicating with our retailers and will honor all existing contracts and agreements that are in place.”
The locations could be sold individually or packaged to smaller non-refining players, noted Michael Ervin from Calgary-based consulting firm MJ Ervin and Associates. However, the agreement prohibits Suncor from selling the locations to Imperial Oil or Shell Canada.
Ervin said the divestiture process is unprecedented given the lack of consolidation in Canada’s integrated oil and gas sector. ”It’s pretty rare because we haven’t seen two large downstream companies merge before.”
Few if any independent owner-operated stations would be affected by the sale, Ervin said. “There are very few of those leasee operations left,” he said. “They used to be a big part of the retail landscape 20 years ago, but not so much today.”
Most of the locations Suncor is selling are located in suburban Toronto.
Suncor’s merger with Petro-Canada created the Canada’s largest integrated oil company that both produces and refines oil and gas, which it sells through 1,000 retail outlets across the country. Suncor Chief Executive Rick George has said all existing Sunoco stations would eventually be rebranded under the Petro-Canada banner.