Gum To Gummies: Heir To Wrigley Fortune Jumps Into Cannabis Retail
|ca 23 Feb 2021 at 12:34|
(Reuters) Billionaire William BeauWrigleyJr. is takingcannabisproducer Parallel public, in a merger due to complete this summer with Canadian-listed Ceres Acquisition Corp that values the Atlanta, Georgia-based firm at $1.88 billion.
Parallel, the first firmWrigleyhas led since selling his familys chewing gum business for US$23 billion in 2008, will take on Ceres listing on the NEO exchange as expectations of an easing of U.S. rules on the pot sector draws investment.
Shares of Ceres surged 19 per cent to $12.50 as the deal comes at a time when officially-sanctioned sales ofcannabishave surged to record levels during the COVID-19 pandemic.
The combined company expects to have $430 million cash when the deal closes, a spokeswoman for Parallel confirmed to Reuters.
With around 50 retail stores, cultivation and manufacturing sites in four U.S. states, Parallel will use the money to expand into new markets. It sells finished products including gummies, vapes and balms, but not chewing gum.
The company, which also named record industry executive Scooter Braun as a special adviser, said it currently has license applications pending in Georgia, New Jersey and Virginia.
U.S. firms that grow or sellcannabiscannot list their shares on the countrys major stock exchanges as marijuana remains illegal at the federal level.
Jay-Z backed Californian pot producer TPCO Holdings also went public on NEO, whilecannabisreview site Weedmaps parent struck a deal in December to list on Nasdaq.
Parallels spokeswoman said it has also received commitments from a group of investors for a $225 million private investment in a public equity (PIPE) transaction when the deal closes.
The PIPE investment was over-subscribed, with a large chunk of the raise set to come from existing Parallel and Ceres investors, the spokeswoman said.
Parallel is already profitable, and expects to be cash flow positive this year, the company said on a call following the merger announcement.
Besides decriminalization in the selling of weed products,Wrigleyfeels one of the most significant changes could be the loosening of constraints around banking.
That will frankly make life easier for companies like ours to navigate some of those territories and do so in a much more cost effective fashion,Wrigley, who will remain the combined companys chief executive officer, told Reuters.
U.S. laws have prevented interstate movement of pot products and has deterred banks and other financial institutions.
But dealmaking and fundraising in the industry remains hot as expectations grow that President Joe Bidens administration will relax federal prohibitions.
Joe Crouthers, chief executive of Ceres, a special purpose acquisition vehicle (SPAC), said thecannabismarket has a lot of positive momentum, and some room is still left for growth.
Youre starting to see not only the companies deliver, but the governments deliver on some of those conversations and promises, said Crouthers, who will join Parallels board.
SPACs have become a popular route to the stock market as they can be completed more quickly than an IPO and grant greater certainty over the funds a company will raise.
(Reporting by Shariq Khan in Bengaluru; Additional reporting by Arunima Kumar; Editing by Bernard Orr, Alexander Smith and Saumyadeb Chakrabarty)