Parkland Acquires Urbieta Oil; Shares Pop

Parkland (PKI) announced Wednesday that it has signed a deal to acquire the assets of Urbieta Oil and its affiliates. Parkland is a convenience store and supplier, distributor, and retailer of fuel and related products, servicing customers across Canada, the United States, the Caribbean region, and the Americas. Urbieta is a retail, convenience, and fuel distribution company with operations focused on the Miami market.

The Urbieta acquisition complements Parkland’s existing business operations in the fast-growing South Florida region.

Parkland USA president Doug Haugh said, “This acquisition advances our growth strategy to increase our convenience retail presence in a region where we have had success with fuel supply and commercial operations.

“Adding the Urbieta stores nearly doubles our U.S. retail business, provides immediate scale in a resilient, fast-growing market, and creates opportunity to meet customers’ needs through our ON the RUN convenience brand.”

Haugh added that the fragmented U.S. market presents a long track of consolidation opportunities for Parkland to grow its scale and better serve its customers.

The gross profit from the acquired assets is allocated approximately 85% to the retail activities and 15% to the commercial and wholesale activities. Ninety percent of the transaction consideration will be funded from the capacity of the existing credit facility, and the remaining 10% with Parkland common shares issued from treasury. The transaction is expected to close in the fourth quarter of 2021. (See Insiders’ Hot Stocks on TipRanks)

On October 30, TD Securities analyst Michael Van Aelst maintained a Buy rating on PKI and a C$53 price target. This implies 41.7% upside potential.

Overall, consensus among Wall Street analysts is that PKI is a Buy based on eight Buys. The average Parkland price target of C$50 implies 33.7% upside potential to current levels.

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