12:31 PM EDT, 04/15/2024 (MT Newswires) -- Parkland Corp. ( PKIUF ) rose 5% on the Toronto Stock Exchange Monday.

The Calgary-based gas station operator on Sunday announced that a strategic review "is unnecessary and does not consider the best interests of the majority of our shareholders."

On Friday, Simpson Oil Ltd. (SOL) sent a letter to Parkland's board calling for a strategic review and wants the company to pursue a transaction.

SOL holds common shares representing approximately 19.7% of PKI.

"We agree that PKI is trading at a sizeable discount to where its comps trade and the company has underperformed the broader market (S&P/TSX) over the last five years," CIBC Capital Markets analyst Kevin Chiang said in a note to clients.

"While we will need to see how SOL and PKI work through their issues, we view this recent development as a positive for PKI's share price," Chiang said.

"Fundamentally, we believe PKI is positioned to double its available cash flow per share from 2023 to 2028 and trades at an undemanding valuation," the analyst said. "With SOL taking a more activist stance, this likely acts as an additional near-term catalyst."

Chiang maintained an Outperform rating and $57 price target on PKI.

"Simpson's latest comments are consistent with our view that significant value exists in PKI's core businesses and strong operational talent," TD Securities analyst Michael Van Aelst said in a note to clients. "That said, Simpson believes different stewardship is required and is open to discussing its value creation thesis with potential partners."

"With Simpson and Parkland disagreeing on the validity of the Governance Agreement, a court battle is now possible," Van Aelst said.

The analyst maintained a Buy rating and $53 price target on PKI.

(MT Newswires covers equity, commodity and economic research from major banks and research firms in North America, Asia and Europe. Research providers may contact us here: https://www.mtnewswires.com/contact-us)