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Sale to boost marketing division

Parkland Fuel Corp. (TSX: PKI ) has struck a deal to divest itself of two businesses in its long-haul transportation division.

Parkland Fuel Corp. (TSX: PKI ) has struck a deal to divest itself of two businesses in its long-haul transportation division.

The Red Deer-based fuel distribution and marketing company announced on Friday that it is selling Petrohaul and Wiebe Transport to Seaboard Liquid Carriers Ltd., part of the Seaboard Transport Group of Companies.

The sale price is $23.5 million, with Parkland also entering into a multi-year agreement with Seaboard for distribution services in the markets served by Petrohaul and Wiebe. Parkland said these account for less than a third of its long-haul transportation in Canada.

“Parkland’s growth has made us one of the largest purchasers of petroleum transportation services in Canada, which generally allows us to secure competitive long-haul fuel distribution agreements that assure reliable delivery across our markets,” said Bob Espey, president and CEO of Parkland.

“Given the advantages we have realized with our increased size, we identified the need to divest the long-haul transportation division to a strategic partner.”

Espey added that the sale will enable Parkland to increase its investment in its fuel marketing business. It is also expected to reduce Parkland’s maintenance capital requirements and associated overhead costs.

Petrohaul was responsible for Parkland’s fuel hauling in Western Canada. This encompassed some 600 retail and commercial locations.

Wiebe specializes in the transportation of bulk commodities like propane and fertilizer.

Included in the sale are a number of tractors, tanks, trailers, light trucks and several properties in Northern Alberta.

Seaboard is a Canadian bulk liquid carrier specializing in petroleum products. It is based in Nova Scotia but has a portfolio of companies and brands in Canada and the United States.