July 18 (Reuters) - Suncor Energy Inc said on
Monday it had added three new independent directors and would
review a possible sale of its retail gas station business, as
part of an agreement with activist investor Elliott Investment
Canada's second-largest crude oil producer has been under
pressure from Elliott over its operational and safety record,
and Suncor Chief Executive Officer Mark Little resigned earlier
Elliott, which owns about 3% of Suncor, has urged the
company to bring in new directors and undergo a management and
strategic review. The investment firm could not be
reached for comment.
Suncor owns Petro-Canada, a network of 1,800 retail and
wholesale fuel stations across Canada.
Shares of Calgary, Alberta-based Suncor rose 2.4% amid
broader gains for oil companies on Monday.
"The stock will pop on the news, but is it the best for them
in the long run (to sell the retail business)? Probably not,"
said Darren Sissons, vice president and partner at Campbell, Lee
& Ross, a Suncor shareholder.
Selling the retail business would reduce Suncor's
diversification, Sissons said.
The bidders for that business will likely include
Alimentation Couche-Tard Inc and Seven & i Holdings Co
Ltd, better known as 7-Eleven, said Brian Madden, chief
investment officer at First Avenue Investment Counsel, a
"They'd be crazy not to (bid). It's a trophy asset," Madden
Couche-Tard and 7-Eleven could not be immediately reached
Private equity and infrastructure funds are also likely to
be interested, said a source familiar with the matter. The
source, who spoke on condition of anonymity, said Elliott is
satisfied that it has largely achieved its objectives through
the changes Suncor announced on Monday and since the activist
investor revealed its demands in April.
Suncor's retail business could be worth C$5 billion ($3.86
billion) to C$8 billion ($6.18 billion), National Bank analyst
Travis Wood said.
Little, the former Suncor CEO, said in May that the company
was not interested in selling the unit.
Suncor said it would provide an update on the strategic
review in the fourth quarter.
Suncor named industry veterans Ian Ashby, Chris Seasons and
Jackie Sheppard as its new independent directors. Seasons and
Sheppard will oversee the strategic review and make a
recommendation as well as join Suncor's search committee for a
With the changes, Suncor's board will expand to 13 members,
the company said, adding that two existing directors will retire
by the end of the year.
Little stepped down as Suncor's CEO after a worker fatality
at the company's oil sands Base Mine in northern Alberta.
The death was the fifth at a Suncor site since 2019, when
Little became CEO, and the thirteenth since 2014, by far the
worst safety record among Canadian oil producers.
($1 = 1.2950 Canadian dollars)
(Reporting by Rod Nickel in Winnipeg and Ruhi Soni in
Bengaluru; additional reporting by David French; Editing by Maju
Samuel and Paul Simao)