23andMe to Go Public Via SPAC
- By Sydnee Gatewood
The latest in a long line of companies pursuing alternative ways to go public, popular DNA-testing and research company 23andMe Inc. announced a cash-and-stock deal with special purpose acquisition company VG Acquisition Corp. (NYSE:VGAC) on Thursday.
In its role as a SPAC, New York-based VG Acquisition, which is backed by Virgin Group founder Sir Richard Branson, acts a shell company that raises funds in an initial public offering with the goal of acquiring a private company, which then becomes public as a result of the merger.
As for Sunnyvale, California-based 23andMe, it sells genetic testing kits to consumers in order for them to learn more about their potential health risks, ancestry and traits.
Valuing the combined entity at $3.5 billion, the deal is expected to generate up to $759 million of gross proceeds for 23andMe. Of that, $250 million is from a range of investors that include Branson, 23andMe co-founder and CEO Anne Wojcicki and several other investment firms like Fidelity Management.
Of the hundreds of companies reviewed for consideration, Branson said 23andMe "stands head and shoulders above the rest."
"As an early investor, I have seen 23andMe develop into a company with enormous growth potential," he added. "Driven by Anne's vision to empower consumers, and with our support, I'm excited to see 23andMe make a positive difference to many more people's lives."
In regard to other existing shareholders of 23andMe, 100% of their equity will roll over into the combined company, of which they will own 81%.
Wajcicki also expressed her excitement for the deal as 23andMe prepares for the next phase of its expansion, "which will create new opportunities to revolutionize personalized health care and medicine." The transaction will provide the capital needed to fund investments in key growth initiatives in the company's consumer health and therapeutics businesses.
"We have always believed that health care needs to be driven by the consumer, and we have a huge opportunity to help personalize the entire experience at scale, allowing individuals to be more proactive about their health and wellness," she said. "Through a genetics-based approach, we fundamentally believe we can transform the continuum of healthcare."
With a $1.01 billion market cap, shares of VG Acquisition were up 11.21% following the announcement at $14.98.GuruFocus estimates the stock has gained nearly 50% since it began trading in November 2020.
Upon the deal's close, which is expected to occur in the second quarter, the combined company's shares will trade under the ticker "ME."
Disclosure: None.
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This article first appeared on GuruFocus.
