Parallel to Go Public via SPAC in $1.8 Billion Deal
Florida-headquartered cannabis firm Parallel will go public on Canada’s NEO Exchange in a SPAC deal valuing the firm at more than $1.8 billion.
The multistate cannabis operator — led by William “Beau” Wrigley, the billionaire heir to the iconic namesake chewing gum enterprise — will merge with Ceres Acquisition Corp., a blank check company backed by music industry entrepreneur Scooter Braun.
The deal, announced Monday, was first revealed by Forbes cannabis reporter Will Yakowicz who profiled Wrigley earlier this month.
During that interview, Wrigley said he believed Parallel could one day be worth more than his family’s chewing gum business, which sold to Mars, Inc. in 2008 for $23 billion.
“At Wrigley, we brought joy to people’s lives,” he told Forbes. “This is much bigger than that.”
According to a news release, the Parallel-Ceres venture has received commitments from a group of investors in an oversubscribed $225 million private investment in a public equity (PIPE).
Existing investors in both Parallel and Ceres are participating in the PIPE, and the combined company will have $430 million of cash on hand when the transaction closes sometime this summer.
Wrigley will continue to serve as CEO and chairman of the combined company, and Ceres CEO Joe Crouthers will serve on the board of directors, the release noted.
Meanwhile, Braun, a 39-year-old record industry executive who is credited with discovering Justin Bieber, will serve as a special advisor to the firm.
“With a culture of compliance and strong values, a commitment to social equity, and disciplined growth and innovation, I'm thrilled to work with Parallel,” he said via the release. “Together, Ceres and Parallel have the experience and reputation to drive growth and create value for all their stakeholders.”
According to Wrigley, the deal will “enable Parallel to accelerate existing investments to transform not only our company but also the cannabis industry.”
“We believe Parallel is ideally positioned for its next phase of growth, as we continue to build our presence in strategic markets and invest in innovation, R & D and the customer experience,” he added, noting that the firm is looking to “disrupt the more traditional beverage alcohol and healthcare spaces.”
Parallel currently operates 42 dispensaries across three states — Florida, Massachusetts, and Nevada — and is planning to open additional stores in Texas and Pennsylvania this year.
The company expects to reach $447 million in net revenue and $102 million of adjusted EBITDA in 2021.
An investor presentation released on Monday outlined plans to operate 86 stores across 8 markets in 2021, including new locations in Georgia, New Jersey and Virginia.
Parallel is also eyeing expansions into the California, Illinois, Michigan and New York markets.
“As a public company, we will have access to capital to grow our national footprint through new licenses and M&A, improve our cultivation and production capacity, expand our established retail footprint, develop and launch rare cannabinoids products with therapeutic benefits, and conduct important clinical research in partnership with the University of Pittsburgh School of Medicine,” Wrigley said via the release.
Parallel, which will take over Ceres' listing on the NEO Exchange, currently employs around 1,700 people and is capable of producing 94,000 pounds of cannabis per year.
Founded in 2014 as Surterra Wellness, the company was rebranded as Parallel in 2018 when Wrigley led a $65 million Series C round and took over as CEO and chairman.
Over the next two years, the company acquired businesses in Massachusetts and Nevada, expanded its reach in Florida, and raised another $125 million in funding.
The company also completed a $75 million Series E funding round this year, according to the investor deck.
The deal with Ceres follows several recent SPAC announcements in the cannabis sector.
Last week, Choice Consolidation Corp., founded by former Cresco Labs and Green Thumb Industries executives, completed a $150 million IPO on the NEO Exchange with the intent to acquire U.S. cannabis businesses.
In December, e-commerce platform Weedmaps said it would go public on THE NASDAQ via a merger with Silver Spike Acquisition Corp.
Shares of CERE.U were up 11.3% following the close.
Additional questions for Wrigley were not answered as of press time.
More details are available in the release.