Scooter Braun's SPAC, Beau Wrigley's pot firm Parallel call off merger

(Reuters) -Cannabis producer Parallel and media industry executive Scooter Braun-backed Ceres Acquisition Corp have mutually terminated their $1.88 billion merger agreement, the blank-check company said on Thursday.

While the companies did not give a reason for pulling the plug on the deal, three sources familiar with the talks told Reuters 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 sources requested anonymity as the negotiations were confidential.

When asked if the company would meet the financial forecasts it pitched to investors in February, Parallel Chief Development Officer James Whitcomb said as a private company it does not comment on its financials.

“Our company is strong, financially healthy and with a bright future. Any speculation to the contrary is completely inaccurate,” he added.

Ceres did not immediately respond to a Reuters request for comment.

Several investors who had committed to a $225 million private investment in public equity refused to invest over the following months, the sources added.

Canada-listed Ceres will continue to hunt for another private company to take public until March 3 next year, it said. Special purpose acquisition companies (SPACs), which are formed for the purpose of merging with a private firm and taking them public, typically have to clinch a deal within two years of listing.

Parallel, led by billionaire William “Beau” Wrigley Jr, sells products including gummies, vapes and balms.

SPACs, which became a hot trend on Wall Street last year, have somewhat fizzled out in recent months after tightening regulatory scrutiny.

Other proposed deals, including those of sports card firm Topps and the high-profile deal between SPAC magnate Bill Ackman and Universal Music Group, have also collapsed.

Reporting by Niket Nishant and Shariq Khan in Bengaluru;Editing by Vinay Dwivedi