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Canadian company acquires Sol petrol network in US$1.2b deal

Published:Friday | October 12, 2018 | 12:00 AM

Sol Investments Limited, the largest independent fuel marketer in the Caribbean, controlled by Kyffin Simpson, has joined forces with Parkland Fuel Corporation, an independent marketer of fuel and petroleum products as well as a convenience store operator based in Canada.

The two companies announced an agreement on Wednesday to combine their businesses, a US$1.21-billion (CDN$1.57-billion) non-cash deal that will see Parkland taking a 75 per cent stake in Sol Investment, while Sol, in turn, will own one-tenth of the enlargened Parkland business.

The transaction is strictly a share swap and does not include debt.

Parkland will issue 12.16 million Parkland shares to Sol at CND$42.62 per share, which represents the five-day volume-weighted average price of Parkland's common shares on the Toronto Stock Exchange as of market close on October 9. Sol will end up with 9.9 per cent of the issued and outstanding common shares in Parkland.

The deal effectively values Sol Investment at US$1.61 billion.

Parkland also has the right to acquire the remaining 25 per cent of the shares in Sol, under a shareholder agreement between the two companies.

Sol Petroleum is a Barbados-based, wholly owned subsidiary of Sol Investments. It supplies and markets a total of 4.8 billion litres of fuel annually across 23 countries in the Caribbean, and generated US$215 million (CND$280 million) in adjusted earnings before taxes, depreciation and amortisation in the one-year period ending June 2018.

The company operates in Jamaica, but primarily as a supplier of lubricants. Sol Petroleum Jamaica supplies lubricants for automotive and industrial applications. The company, based in Kingston, launched into business in June 2013. Its Jamaican market entry came after Shell sold its marketing and service station operations to French marketing company Rubis in 2012.

Sol acts as macro-distributor for Shell lubricants in Jamaica, provides associated technical support services, and is also involved in a joint venture that provides bunkering services from the Kingston Harbour.

Sol Investments, which is part of the Simpson Group, operates a regional network of 526 retail stations - 266 of which are company-owned or company-leased sites, and 260 of which are dealer-owned and operated sites. The petrol stations operate under the Shell, Esso and Sol brands.

The Parkland acquisition is expected to close by the end of the year.