North American distributor and marketer of fuels and lubricants, Parkland Fuel Corporation, last Wednesday announced that it has entered into a definitive agreement to acquire the assets of Pioneer Energy.

Subject to the satisfaction of closing conditions and closing adjustments, the assets of Pioneer will be purchased for C$378 (US$345) million, including $259 million in cash, $119 million in common shares of Parkland, and the assumption of standard operating liabilities. At 6.9 times Pioneer's trailing twelve month EBITDA of approximately $55 million, this acquisition is both accretive and attractively priced for a premier retail fuel network. All financial figures are expressed in Canadian dollars, except where otherwise noted.

Pioneer's current joint owners, The Pioneer Group Inc. and Suncor Energy Inc., will receive consideration as follows:

The Pioneer Group Inc. will receive $76 million or 39% of their total consideration in cash and $119 million or 61% of their total consideration in common shares of Parkland. One third of the common shares held by The Pioneer Group Inc. will be subject to a one year minimum holding period, and the remaining two thirds are subject to a two year minimum holding period; and Suncor Energy Inc. will receive $183 million in cash.
Parkland remains poised for further growth with a strong balance sheet. Parkland's existing credit facility can be utilized to fund the cash consideration of the Acquisition.

"We have long recognized the Ontario retail marketplace as a critical growth opportunity for Parkland, aligning with Parkland's overarching supply strategy. We also recognize Pioneer Energy as one of Canada's most respected independent retail fuel marketers, having built Pioneer into the strongest independent retail fuel brand in Ontario. Given the Pioneer Group's sophisticated understanding of the retail fuel industry, their investment in Parkland is a strong endorsement of our strategy, and we look forward to welcoming their team," said Bob Espey, President and Chief Executive Officer of Parkland. "Our five year growth plan has progressed rapidly as a result of our team's ability to identify and execute disciplined transactions. We continue to anticipate additional accretive acquisitions, adhering to our disciplined approach to growth."

Including the Acquisition, since 2011 Parkland has successfully added six billion litres in petroleum volume, $115 million in annualized EBITDA through acquisitions and their associated synergies, and $11 million from the Give me Five! initiative. With the Acquisition, Parkland is expected to attain its goal to add $125 million in additional Adjusted EBITDA by 2015, a full year earlier than expected.

This acquisition adds 319 gas stations in Ontario and 74 gas stations in Manitoba, increasing Parkland's national footprint to more than 1,000 gas stations, or roughly 9 percent of the Canadian retail fuel market; includes 148 Pioneer-branded and 228 Esso-branded gas stations; and achieves annual Adjusted EBITDA of $250 million by 2015.

Founded in 1956 by the late Murray Hogarth who just recently passed, Pioneer has built a premier network of gas stations throughout Ontario and Manitoba, operating primarily under the Pioneer and Esso brands. Today, Pioneer distributes more than two billion litres of fuel annually through 393 gas stations and a recently acquired commercial operation in Ontario, New Brunswick and Nova Scotia. Pioneer currently distributes 5.1% of total retail fuel volumes across Canada and has a 12% share of the Ontario and Manitoba retail gas markets.

Hogarth commented before his passing, "It is extremely gratifying to me that the Pioneer team and brand will continue driving forward with Parkland along with our successful legacy that began in 1956."

"I want to thank everyone in the Pioneer family for their tremendous work and dedication over the years in making Pioneer a great success and one of Canada`s most respected independent fuel marketers," said Tim Hogarth, Chief Executive Officer and Executive Chairman of Pioneer. "The Pioneer Group chose to invest the majority of its proceeds in Parkland because of our long term industry commitment and belief in Parkland's ability to continue its aggressive growth path."

Tim Hogarth, Chief Executive Officer and Executive Chairman of Pioneer, is expected to be appointed to Parkland's Board of Directors conditional upon completion of the Acquisition.

The Acquisition is subject to the receipt of customary third party consents and regulatory approvals, including approvals from the Toronto Stock Exchange and the Competition Bureau.