By Cameron Conway
Last Friday, Parkland Fuel (TSX:PKI) released its third-quarter results. The company managed to post revenue of $1.5 billion, a gross profit of $112.8 million, and earnings per share (9 months ending) of $1.00. But there was a surprise waiting for investors.
Parkland announced that it had entered into a definitive agreement to purchase North Dakota-based SPF Energy. The price tag from SPF Energy’s parent companies Farstad Oil and Superpumper comes in at $110 million. The payments will be made through $89 million in cash and $21 million in Parkland shares.
This acquisition gives Parkland a foothold in the United States with access to SPF’s gasoline, distillates, and lubricating oil markets, where 1.1 billion liters of refined petroleum products currently flow into North and South Dakota, Montana, Minnesota, and Wyoming.
Parkland not only scored this new market territory (including 200 independent gas stations) but also receives a rail trans-loading facility and the equivalent of 40,000 barrels of bulk storage in Minot, North Dakota. The deal is expected to close by Jan. 1.
This is not the only major purchase Parkland has made this year; it also bought
Elbow River Marketing, Sparling’s Propane, and TransMontaigne. On top of the SPF Energy acquisition, Parkland believes these deals will add $55 million in adjusted EBITDA to the company.
The many faces of Parkland
These 2013 acquisitions are being brought into an already nationwide portfolio. Where some oil, gas and lubricant distributors have made their homes in the major cities of Canada, Parkland has carved out a niche market in rural Canada and continues to grow as Canada’s largest independent marketer and distributor of fuels.
If you don’t recognize the name Parkland Fuels Corporation you may recognize one or more of its regional and national branches, including Bluewave Energy, Columbia Fuels, Neufield Petroleum & Propane, Island Petroleum, Fas Gas Plus, and Race Trac Gas.
The parent company may be obscure now, but its growth-through-acquisition strategy means it’s trying to become a force to reckon with in the energy sector.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Cameron Conway does not own any shares in the companies mentioned. The Motley Fool does not own any shares in the companies mentioned.