Image of a contract being torn up

Chewing gum heir William “Beau” Wrigley Jr.’s marijuana multistate company Parallel and music mogul “Scooter” Braun’s Ceres Acquisition Corp. mutually called off their $1.9 billion blockbuster merger, gumming up Wrigley’s plans to take his MSO public.

The companies didn’t provide a reason for terminating the merger, which would have allowed the resulting company to go public by taking on Ceres’ listing on Canada’s NEO Exchange.

But Reuters – citing anonymous sources – 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.”

The collapse of the deal to take Atlanta-based Parallel public by Ceres, a special purpose acquisition company in the Los Angeles area, also might reflect a cooling of SPAC activity in recent months in the wake of greater regulatory oversight of the investment vehicles.

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Neither Parallel, which does business as Surterra Wellness in some states, nor Ceres immediately responded to MJBizDaily queries for comment.

An investor presentation in February detailed Parallel’s plan to expand within two years from 42 retail outlets in five markets – Florida, Massachusetts, Nevada, Pennsylvania and Texas – to 86 stores in eight markets.

In addition to adding retail stores in existing markets, Parallel expressed confidence in winning licenses in Georgia, New Jersey and Virginia.

It’s unclear how many stores Parallel has added this year, but the company has expanded into Illinois through a $100 million acquisition announced in April.

Parallel had projected revenue of $447 million for 2021 with positive EBITDA – earnings before interest, taxes, depreciation and amortization – of $102 million.

Parallel is privately held, so financial information for this year isn’t available.

But Reuters reported, based on its sources, that Parallel’s revenues haven’t come close to the trajectory needed to reach $447 million in revenues by year-end.

The investor presentation also showed that Parallel posted net losses of $263 million in 2019 and $140 million in 2020.

Parallel Chief Development Officer James Whitcomb didn’t respond to a Reuters question asking if the company would meet the financial projections provided to investors in February.

But he did tell Reuters: “Our company is strong, financially healthy and with a bright future. Any speculation to the contrary is completely inaccurate.”

The February announcement noted that several investors had committed $225 million toward the deal, but Reuters reported that those investors subsequently refused to invest.

The Parallel agreement would have followed on the heels of two other billion-dollar deals to take cannabis-related companies public:

Wrigley was to continue to serve as Parallel’s chair and CEO, while Braun – who has managed such musical and entertainment artists as Justin Bieber, Ariana Grande and Demi Lovato – was going to serve as a special adviser.

Ceres, which is listed on the NEO Exchange as CERE.U and the U.S. over-the-counter markets as CERAF, said in a short news release that it will continue to look for another private company to take public.

The special purpose acquisition company has until March 3, 2022, to make a transaction, unless that date is extended by its shareholders.

Jeff Smith can be reached at jeff.smith@mjbizdaily.com.