RE: glenda5 Feb 2021 10:23
Long winded...The Times...Merger with Richard Branson’s Spac values 23andMe at $3.5bn
Genetics testing company’s CEO calls partnering with Virgin founder a ‘slam dunk’
A pioneer of direct-to-consumer genetic testing, 23and Me has recently shifted its focus to using its research database for drug discovery © Bloomberg
February 4, 2021 4:33 pm by James Fontanella-Khan and Hannah Kuchler in New York
Richard Branson’s publicly listed special acquisition purpose company has agreed to merge with 23andMe, valuing the genetics testing group at about $3.5bn.
23andMe is the latest company to go public via a merger with a Spac, as an increasing number of private companies prefer the less burdensome route to a traditional initial public offering.
The Silicon Valley-based company will trade on the New York Stock Exchange by reverse-merging with the British entrepreneur’s VG Acquisition, which raised $480m in October to hunt for consumer-facing businesses.
Under the terms of the transaction, VG Acquisition will inject $509m in cash into 23andMe, while a group of investors will provide an additional $250m via a private placement. Sir Richard and Anne Wojcicki, 23andMe’s chief executive, will contribute $25m each to the private placement. Other institutional investors include Fidelity, Altimeter Capital, Casdin Capital and Foresite Capital.
Once the deal is complete, existing 23andMe shareholders will own 81 per cent of the company, which will trade under the ticker symbol “ME” on the NYSE.
Over the past 12 months, a wave of Spacs have been launched as sports stars, celebrities, industry titans and retired politicians have enthusiastically backed Wall Street’s latest trend despite the historically poor performance of these vehicles.
Sir Richard said in an interview with the Financial Times that Spacs “cut through a lot of red tape”. He said he had a great experience with the Virgin Galactic Spac in 2019, where he combined his space tourism venture with the blank-cheque company of Chamath Palihapitiya, the former Facebook executive who has become a poster child of the recent Spac frenzy.
Ms Wojcicki said she had previously been resistant to going public, since she likes to know her investors.
“Partnering with Richard, that was the slam dunk,” she told the FT. “Richard Branson is the pioneer of thinking big. You couldn’t ask for bigger.”
“We’re trying to transform healthcare, and that is a long-term vision. It’s not overnight,” she said. “There’s definitely bumps in the road.”
Since Ms Wojcicki co-founded the company in 2006, it has faced numerous challenges, including concerns about privacy hitting growth in the sales of consumer genetic tests, and regulatory scrutiny about allowing patients to access the information they might not understand.
Revenues at 23andMe shrunk from $441m in the fiscal year 2019 to $305m in 2020, according to an investor presentation. The company projected revenues of $218m in the 2021.
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