March 22 (Reuters) – Activist investor Engine Capital on Wednesday urged fuel marketer Parkland Corp (PKI.TO) to look at strategic alternatives including the sale or spinoff of non-core assets to become a more focused fuel and convenience retailer.

Shares of Parkland surged more than 9% to C$31.98.

“If the board is unwilling to optimize the business in the public market, we believe the board should consider a sale of the entire company to either private equity or strategic buyer,” Engine Capital, which owns about 2% of Parkland, said in a letter.

Parkland has accumulated a range of assets that are not typically owned by pure-play fuel and convenience operators, said Engine Capital.

“We believe these assets create significant complexity and detract from the company’s underlying valuation leading investors to view Parkland as a conglomerate with disparate assets, instead of a pure play convenience retailer.”

Engine added it was “particularly troubled by Parkland’s staggering underperformance” compared with Canadian convenience retailer Alimentation Couche-Tard (ATD.TO).

“The letter has been circulated by management to the board of the company for its review and consideration,” Parkland said in an e-mailed statement.

The activist investor added that Parkland could be worth C$45 per share if the board follows Engine’s recommendations, which also include adding directors with convenience merchandising and capital allocation experience.

Engine also urged the company to improve its compensation framework to better align management’s incentives with shareholder interests.

Reporting by Arunima Kumar in Bengaluru; editing by Eileen Soreng and Devika Syamnath

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