23andMe heads to public markets by SPAC merger with VG Acquisition Corp.

Client genomics platform 23andMe is on its approach to turning into a publicly-traded firm by its merger with VG Acquisition Corp., a particular goal acquisition firm sponsored by Virgin Group.

The 2 corporations introduced right this moment they’ve entered right into a definitive merger settlement that’s anticipated to shut within the second quarter of this 12 months. As soon as accomplished, the mixed corporations’ inventory will probably be traded on the New York Inventory Change underneath the ticker image ME.

The deal values 23andMe at roughly $3.5 billion by the mix of inventory and money financing.

The announcement says that the businesses count on as much as $759 million of gross proceeds to be delivered to the mixed firm. Of that quantity, $509 million comes from money held in VG Acquisition Corp.’s belief account, and $250 million comes from the concurrent non-public placement of frequent inventory, priced at $10.00 per share.

Sir Richard Branson, the founding father of the Virgin Group, and Anne Wojcicki, the CEO and cofounder of 23andMe, are every investing $25 million within the PIPE, together with funds managed by Constancy Administration & Analysis Firm, Altimeter Capital, Casdin Capital, and Foresite Capital.

As a part of the transaction, 23andMe’s current fairness holders will roll 100% of their fairness into the mixed firm. All instructed, 23andMe will probably be capitalized with as much as $984 million in money, assuming no public shareholders of VG Acquisition Corp. train their redemption rights.

Whereas the merger was unanimously authorized by each corporations’ Boards of Administrators, it’s topic to approval by VG Acquisition Corp.’s shareholders and different customary closing circumstances.

WHY THIS MATTERS

23andMe is a direct-to-consumer service that provides customers insights into their DNA. The outcomes can be utilized to teach about customers’ ancestry, in addition to their well being predispositions.

Extra not too long ago, the corporate has begun utilizing its service to facilitate genetic analysis. For instance, in 2019 the corporate teamed up with the Michael J. Fox Basis for Parkinson’s Analysis. It additionally created a COVID-19 Severity Calculator primarily based on a examine it performed, which included 10,000 contributors identified with the illness and 750 who have been hospitalized.

This merger might function a kick-start to get 23andMe again on monitor after 2020 proved to be a 12 months of economic struggles. At first of the 12 months, it laid off 100 staff throughout its shopper enterprise because of disappointing gross sales numbers. When the information broke, Wojcicki instructed CNBC the business was seeing a market calm down, and buyer’s privateness issues have been a significant component.

The corporate has a previous of ups and downs. In 2013, the FDA ordered 23andme to right away cease promoting its genetic testing service till the providing acquired a de novo clearance. It bounced again in 2017 when the FDA gave the go-ahead to promote its direct-to-consumer genetic take a look at kits.

One other contributing issue to the corporate’s most up-to-date upswing is its $82.5 million fairness funding from Sequoia Capital and NewView Capital. 23andMe has a little bit of a historical past bringing in substantial quantities of funding. In 2018 it landed $300 million, and the 12 months earlier than it had a $250 million spherical.

THE LARGER TREND

Going public by a SPAC merger has turn into a serious development for digital well being corporations over the past 12 months.

Hims & Hers hit the general public market earlier this 12 months after closing its merger with Oaktree Acquisition. Talkspace not too long ago introduced a merger with Hudson Govt Capital to go public in a deal price $1.4 billion. Butterfly Community and UpHealth every introduced SPAC mergers in November.

Most not too long ago, Reuters reported on rumors that each Sharecare and Ro are discussing potential merger agreements with SPACs that will result in multibillion-dollar valuations.

ON THE RECORD

“As a fellow business disruptor, in addition to early investor in 23andMe, we’re thrilled to companion with Sir Richard Branson and VG Acquisition Corp. as we method the following section of our enterprise, which is able to create new alternatives to revolutionize customized healthcare and medication,” CEO Anne Wojcicki stated in a press release.

“We’ve all the time believed that healthcare must be pushed by the patron, and now we have an enormous alternative to assist personalize all the expertise at scale, permitting people to be extra proactive about their well being and wellness. By a genetics-based method, we essentially consider we will rework the continuum of healthcare.”