Parallel (the “Company”), one of the largest privately-held multi-state cannabis operators in the United States (U.S.) and Ceres Acquisition Corp. (“Ceres”) (NEO: CERE.U, CERE.WT;OTCQX: CERAF), a special purpose acquisition corporation (SPAC), today announced they have entered into a definitive business combination agreement involving a transaction that, if completed, would result in Parallel becoming a public company (the “Transaction”). In addition, a group of investors, led by Ceres and Parallel, have committed to participate in the Transaction through an over-subscribed private investment in public equity (“PIPE”) of US$225 million. Subject to the satisfaction of Conditions (as defined below), the Transaction is expected to close in Summer 2021.
William “Beau” Wrigley Jr., Chairman and CEO of Parallel said: “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. Today’s milestone announcement is a testament to Parallel’s impressive growth to date, the strength of our business fundamentals, strong balance sheet, and above all, our unwavering commitment to further developing and enhancing our portfolio of cannabinoid products.
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.”
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.”
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.”
Summary of Transaction Terms
Ceres has agreed to acquire Parallel at an implied enterprise value of US$1.884 billion, and has received commitments from a group of investors in an over-subscribed PIPE of US$225 million at a price of US$10.00 per share issuable immediately prior to, and conditional on, completion of this business combination with Parallel. Substantial investment in the PIPE came from existing Parallel and Ceres investors, as well as institutions and private family offices in both the U.S. and Canada. The proceeds of the PIPE are intended to be used to fund Parallel’s continued growth and market expansion.
Following the close of the Transaction and subject to shareholder approval, Beau Wrigley will continue to serve as Parallel’s Chairman and CEO, Scooter Braun will serve as a Special Advisor, and the following individuals will constitute the Board of Directors:
- Marina Bozilenko, who has over 30 years of investment banking and other healthcare industry expertise and currently serves as Strategic Advisor to William Blair and Company, where she previously served as Managing Director and Head of Biotech & Pharma;
- Kevin Douglas, M.D., a biopharmaceutical professional with over 15 years of U.S. and international industry experience, who currently serves as Medical Director of U.S. Rheumatology and Study Designated Physician/Therapeutic Medical Director at Abbvie, Inc.;
- Sarah Hassan, who was a founding partner of IM HealthScience and acting CFO through the sale of the company to Nestlé HealthScience in 2020, in addition to holding prior positions as a venture capital partner and fund manager;
- Linda McGoldrick, a global business strategy leader and policy expert in healthcare, who has spent her entire 30-year career working in senior executive and advisory roles, including as CEO and independent board member of numerous healthcare and life sciences companies;
- Joe Crouthers, Chairman and CEO of Ceres Acquisition Corp., who is a seasoned cannabis investor and entrepreneur who previously worked as a commodities trader and portfolio manager at Goldman Sachs; and
- Phil Harris, current General Counsel at Parallel, who has experience as a partner across several Chicago based global law firms, where he served as a practice leader and on the management and diversity committees.
This strong slate of expertise in wellness, healthcare, life sciences and branding represents a significant diversity of perspectives across the Board.
The combined publicly listed company is anticipated 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.
The Transaction is subject to the satisfaction of certain conditions (the “Conditions”), including but not limited to the approvals of U.S. state and local regulatory authorities, and the NEO Exchange and Canadian securities regulatory authority approvals, as well as certain third party consents. There can be no assurance that these conditions will be satisfied. The Transaction is also subject to Ceres shareholder approval and Parallel stockholder approval.
Parallel Investment Highlights
- Proven Business Model, Attractive Valuation and Strong Fundamentals
- The Transaction values Parallel at an implied enterprise value of US$1.884 billion with expected Net Revenues of US$447 million in 2021.
- Expected pro forma cash on hand of US$430 million at close, including US$225 million from the PIPE and US$120 million of cash held in Ceres’ escrow account assuming no redemptions.
- Management team and infrastructure designed to scale for meaningful growth driven by ongoing supply chain innovation and market growth.
- Strong Presence in High Growth Markets, Complemented by Omnichannel Platform
- Operations in five states that have potential to see significant growth in cannabis sales, including Florida, Pennsylvania, Massachusetts, Texas, and Nevada.
- A total of 42 brick and mortar dispensaries drive brand recognition and opportunity to capitalize on market growth.
- 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.
- Robust Research and Development (“R&D”) Platform
- Parallel believes it is a leader in the production and commercialization of rare cannabinoids with significant therapeutic potential.
- Parallel has developed cannabinoid research partnerships with renowned domestic and international research institutions.
- Proprietary and exclusive technologies provide supply and cost advantages over competitors, as well as an expanded portfolio of products with broader therapeutic applications.
- Track Record of Strategic M&A and Partnerships
- Parallel has a demonstrated ability to consolidate, having successfully closed multiple transformative and accretive acquisitions which Parallel believes will enable it to efficiently build scale, create cost synergies, and provide new assets to drive growth.
- Parallel intends to enter into a partnership with COOKIES, a collaboration that will strengthen the Company’s presence in Las Vegas with a well-known consumer retail brand, subject to the review and approval of the Nevada Cannabis Compliance Board.
- Parallel looks forward to leveraging Ceres’ networks to drive meaningful business opportunities, including the founders of 72andSunny, MGMT, Red Light and others.
- Dedication to Corporate Social Responsibility
- Parallel’s commitment to corporate social responsibility (“CSR”) is focused on cultivating well-being with intentionality to benefit our people, customers, communities and the industry at large. Through its many partnerships, Parallel drives CSR through meaningful actions that positively impact the communities where we live and work.
- This includes partnerships with CultivatED, Cannaclusive, Minority Cannabis Business Association, and CannabisLAB. These collaborations enable Parallel to promote social equity, build community relations, and build upon the positive impact of the cannabis industry.
- Internally, Parallel has created Employee Resource Groups, launched an employee-giving platform called Parallel Cares, and organized community clean-up efforts as Parallel associates strive to enrich their communities in many ways.
- Parallel is proud of its diverse employee base, which includes 41% of positions held by females and 37% of positions held by minorities.
- Unmatched Consumer Goods Expertise and Management Track Record
- William “Beau” Wrigley Jr. is the former CEO of the Wm. Wrigley Jr. Company, and grew that company to over US$5 billion in revenue with distribution in 180 countries before orchestrating its sale to Mars in 2008 for US$23 billion.
- Scooter Braun is one of the entertainment industry’s most influential forces with a strong network in consumer industries broadly. His roster of management clients, including some of the biggest pop-culture icons in the world, has a significant fanbase globally across multiple generations, which are increasingly viewing cannabis through a wellness lens.
- The broader management team has decades of consumer goods, retail, financial services and healthcare experience with both public and private companies.
Perella Weinberg Partners LP is serving as financial advisor and Greenberg Traurig LLP and Aird & Berlis LLP are serving as legal advisors to Parallel. Canaccord Genuity Corp. is serving as financial and capital markets advisor and Manatt, Phelps & Phillips, LLP and Stikeman Elliott LLP are serving as legal advisors to Ceres.
Conference Call Information
A call regarding the proposed merger will take place at 9:00 a.m. ET today, February 22, 2021. The call may be accessed by dialing (855)-480-0897 for domestic callers or (469)-565-9982 for international callers. The conference ID is 4779728. Please dial in at least five minutes prior to the start of the call.
A webcast of the call, along with this press release and the investor presentation are available in the “investor” section of the Parallel website atwww.liveparallel.comand Ceres Acquisition Corp.’s website atwww.ceresacquisition.com.
Ceres has filed today an investor presentation which describes in more detail the proposed transaction and provides a business overview of Parallel. The presentation is available under Ceres’s profile onwww.sedar.comand on the U.S. Securities Exchange Commission’s (the “SEC”) website athttp://www.sec.gov, as well as on Ceres’ website,www.ceresacquisition.com.
Ceres expects to file with the Canadian securities regulatory authorities in each of the provinces and territories of Canada, except Quebec, a non-offering prospectus containing disclosure regarding, among other things, the Transaction and Parallel assuming completion of the Transaction. Investors and security holders may obtain a copy of the definitive agreements for the Transaction and the prospectus, when filed, under Ceres’s profile on the SEDAR website atwww.sedar.com.
In connection with the Transaction, Ceres is expected to file a Form S-4 with the SEC and an information circular with Canadian securities regulators. Ceres and Parallel urge investors, stockholders and other interested persons to read, when available, the Form S-4, including the preliminary prospectus and amendments thereto and the definitive prospectus, as well as other documents to be filed with the SEC and documents (including the prospectus and information circular) to be filed with Canadian securities regulatory authorities in connection with the Transaction, as these materials will contain important information about Ceres, Parallel, the combined public company and the Transaction. Ceres also will file other documents regarding the Transaction with the SEC. Investors and security holders will be able to obtain free copies of the proxy statement and all other relevant documents filed or that will be filed with the SEC by Ceres through the website maintained by the SEC atwww.sec.gov. In addition, the documents filed by Ceres may be obtained free of charge from Ceres’ website atwww.ceresacquisition.comor by written request to Ceres at Ceres Acquisition Corp., 1925 Century Park East, Los Angeles, California, United States 90067.
The financial information and data contained in this press release is unaudited and does not conform to Regulation S-X promulgated by the SEC. Accordingly, such information and data may not be included in, may be adjusted in, or may be presented differently in, any proxy statement, prospectus or registration statement or other report or document to be filed or furnished by Ceres, Parallel or any entity that is party to the proposed Transaction with the SEC.