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Shell (SHEL) to Divest Western Assets for Empire Deal Approval

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Shell plc’s (SHEL - Free Report) subsidiary Shell Canada Ltd. has agreed to divest some of its western assets in order to proceed with its $100-million deal to buy gas stations from an affiliate of grocery giant Empire Co. Ltd., according to Canada's competition watchdog.

According to the Competition Bureau, it was determined that the energy company's proposed acquisition of Sobeys Capital Inc.'s 56 gas stations would probably reduce or eliminate competition in three markets in Alberta and British Columbia. The bureau claims that in order to relieve the worries, Shell and its subsidiary Canadian Mobility Services Ltd. would sell its holdings in Brooks, Alberta, as well as in Fort St. John and Mission, B.C.

Per the bureau, Matthew Boswell, the commissioner of competition, is satisfied that the divestiture agreement would handle any competition issues that may arise as a result of the proposed deal.

In December, Shell agreed to acquire all of Sobeys' gas stations in western Canada, claiming that doing so would enable it to expand its retail fuel presence throughout the country. While Sobeys has approximately 391 stations and convenience stores, Shell provides fuel to about 1,383 gas stations across Canada.

Zacks Rank & Key Picks

Shell is a group of U.S. and Europe-based big energy multinationals with operations across the world. Currently, Shell carries a Zack Rank #3 (Hold).

Some better-ranked stocks in the energy sector are Evolution Petroleum Corporation (EPM - Free Report) , Murphy USA (MUSA - Free Report) and Pembina Pipeline Corporation (PBA - Free Report) . While both Evolution Petroleum and Murphy USA sport a Zacks Rank #1 (Strong Buy), Pembina carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Evolution Petroleum is an independent energy company. It was formed to acquire and develop oil and gas fields and apply both conventional and specialized technology to accelerate production, particularly in low-permeability reservoirs. EPM has witnessed an upward earnings estimate revision for 2024 in the past 30 days.

Murphy USA operates stations close to Walmart supercenters and sells low-cost, high-volume fuel. This helps the company to get a lot more business than its competitors. Another significant competitive advantage for the firm is its access to product distribution centers and pipelines, which helps control costs in the intensely competitive retail sector. Over the past seven days, MUSA has witnessed an upward earnings estimate revision for 2023.

Pembina Pipeline has an attractive portfolio of energy infrastructure assets that generate stable, recurring fee and tariff-based revenues. The company’s integrated business model and diversified presence offer attractive upside opportunities compared with most of its peers. PBA has witnessed an upward earnings estimate revision for 2023 and 2024 in the past 30 days.

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