Privately-held multi-state cannabis operator Parallel and special purpose acquisition corporation (SPAC) Ceres Acquisition Corp. (OTCQX: CERAF) have entered into a definitive business combination agreement involving a transaction that, if completed, would result in Parallel becoming a public company. The investors have an over-subscribed private investment in public equity (PIPE) of $225 million. The deal is expected to close in Summer 2021.
The deal values Parallel at an implied enterprise value of $1.884 billion with expected net revenues of $447 million in 2021. The expected pro forma cash on hand of $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.
William “Beau” Wrigley Jr., Chairman and CEO of Parallel said, “This transaction will enable Parallel to accelerate existing investments to transform not only our company but also the cannabis industry, as we seek to disrupt the more traditional beverage alcohol and healthcare spaces. 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 Medical Center. We look forward to working with the Ceres team and benefiting from Scooter Braun’s expertise and extensive influencer network to reach our diverse consumers with creative omnichannel approaches that will fuel Parallel’s leadership in the cannabis industry.”
Formerly Surterra Wellness
In June of 2019, Surterra Wellness closed on the initial $100 million Series D funding round and expanded its Board of Directors. The company noted back then that the participants in the round included existing and new investors including former Patrón Spirits Company CEO, Ed Brown. At this time, Parallel is operating in five states that have the potential to see significant growth in cannabis sales, including Florida, Pennsylvania, Massachusetts, Texas, and Nevada. It has a total of 42 brick-and-mortar dispensaries. Plus, an e-commerce infrastructure that supports the next phase of cannabis distribution, including online order-ahead, curbside pickup, and home delivery sales, which is expected to drive strong net revenue generation.
The company said in a statement that the combined publicly listed company is expected to have Class A Subordinate Voting Stock and Class B Multiple Voting Stock. The Class B Multiple Voting Stock will have 15 votes per share and will be held by Beau Wrigley and his affiliate entities upon close. The Class A Subordinate Voting Stock will have one vote per share and will be the publicly traded class of stock upon the closing of the Transaction.
Scott “Scooter” Braun, Co-Founder of Ceres Group Holdings said, “I have carefully watched the cannabis industry and Parallel stands out as a leader in the space. 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. Together, Ceres and Parallel have the experience and reputation to drive growth and create value for all their stakeholders. Beau and his team stand out among the pack and bring to the table their deep experience and business acumen to run a public business of this size and I believe Parallel is primed for massive growth in the sector. I’m honored and excited for the opportunity.”
Joe Crouthers, Chairman and CEO of Ceres Acquisition Corp said, “Ceres’ deep cannabis and consumer experience, coupled with Scooter’s powerful network, makes Ceres an ideal partner for a well-positioned, well-led, high growth cannabis company like Parallel. The Ceres team has organized a set of truly unique resources that aims to open the top of the consumer awareness funnel and help fuel growth – from capital to cannabis to marketing to an extensive network in entertainment and access to consumers – we look forward to supporting Parallel’s transition to a publicly traded company.”