Ceres, Parallel Call Off SPAC Deal

Ceres Acquisition Corp. (NEO: CERE.U)(OTCQX: CERAF) has decided to call off the Business Combination Agreement dated February 21, 2021, with SH Parent, Inc. also known as Parallel. Ceres said it plans to continue looking for another company for its qualifying transaction before the deadline of March 3, 2022, unless of course that date is extended, with shareholder approval.

Premium Price

Back in February, the deal was valuing Parallel (formerly Surterra Wellness) at an implied enterprise value of $1.884 billion saying the expected net revenues would $447 million in 2021. The expected pro forma cash on hand was to be $430 million at the close, including the $225 million from the PIPE and $120 million of cash held in Ceres’ escrow account assuming no redemptions. At the time, the deal was expected to close in Summer 2021.

Parallel has ongoing operations in four medical and adult-use markets with approximately 50 locations nationwide, including 42 retail stores, and cultivation and manufacturing sites. The company has retail brands using the name Surterra Wellness in Floridagoodblend in Texas; New England Treatment Access (NETA) in Massachusetts; and The Apothecary Shoppe in Nevada. Parallel also has a license under its goodblend Pennsylvania brand for vertically integrated operations and up to six retail locations, in addition to a medical cannabis research partnership with the University of Pittsburgh School of Medicine. Subject to regulatory approval, Parallel said it will add Illinois as a sixth market when its announced acquisition of six Windy City Cannabis licenses is complete.

No Confidence

Reuters reported that “several investors had lost confidence in Parallel’s ability to deliver on lofty financial projections it provided in February when the merger was announced.” With just 42 stores and in some small markets like Texas, the ability to deliver more revenue than companies twice its size had to give investors pause. Reuters also reported that several investors who had committed to the $225 million private investment had refused to invest over the following months. Since Parallel is a private company, actual revenue figures aren’t disclosed. If one estimates Parallel’s revenues and Parallel doesn’t like it, get ready to hear from their lawyer.

 

 

Debra Borchardt

Debra Borchardt is the CEO, Co-Founder, and Editor-In-Chief of GMR. She has covered the cannabis industry for several years at Forbes, Seeking Alpha and TheStreet. Prior to becoming a financial journalist, Debra was a Vice President at Bear Stearns where she held a Series 7 and Registered Investment Advisor license. Debra has a Masters degree in Business Journalism from New York University.


2 comments

  • Tonto Timothy

    October 1, 2021 at 8:27 pm

    Im not following the math here…if u look at Surterra on the Florida public data there total milligrams dispensed would add up to way more than the sales estimates at the bottom. Seems like someone could do some simple fact checking? I don’t get it the data is public this makes no sense.. cannabis deals….

    Reply

    • Debra Borchardt

      October 4, 2021 at 8:37 am

      We made it clear that we were just referencing other data sets. The company refused to deny those numbers on the record and like you said pointed us to the Florida numbers but also refused to go on the record at all about their revenues. Being a private company that is their right. https://growjo.com/company/Parallel GrowJo est is $96m. By comparison, at the end of 2020 Trulieve had 70 dispensaries in FL and reported ~$500m in rev while Parallel has roughly half that amount but claims a similar level of sales. https://knowthefactsmmj.com/wp-content/uploads/ommu_updates/2021/100121-OMMU-Update.pdf Surterra is listed as #3, but their numbers are far lower than Trulieve.

      Reply

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