DNA testing and analytics technology company 23andMe and VG Acquisition Corp. (VGAC), a special purpose acquisition company (SPAC) sponsored by Richard Branson’s Virgin Group, announced a definitive merger agreement.
Upon completing the merger, the combined company’s securities will trade on New York Stock Exchange (NYSE) under the ticker symbol – “ME.” The business combination values 23andMe at an enterprise value of approximately $3.5 billion.
The existing shareholders of 23andMe will own 81% of the combined company, whose cash balance will be more than $900 million at the deal’s closing.
23andMe has raised over $850 million in venture capital funding to date. The company is backed by Sequoia Capital, NewView Capital, GlaxoSmithKline, and other investors.
The 23andMe’s business is based on its distribution of individual home genetic testing kits, which provide customers with insights about their potential health and their family tree based on their DNA. In recent years, the company has started moving beyond telling individual consumers about their DNA and begun developing therapeutics based on research into genetic information its customers provide.
“Of the hundreds of companies we reviewed for our SPAC, 23andMe stands head and shoulders above the rest,” said Richard Branson, Virgin Group Founder. “As an early investor, I have seen 23andMe develop into a company with enormous growth potential. 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.”
The transaction is expected to deliver up to $759 million of gross proceeds by contributing up to $509 million of cash held in VG Acquisition Corp’s trust account and a concurrent $250 million private placement (PIPE) of common stock, priced at $10.00 per share.
Sir Richard Branson, Founder of the Virgin Group, and Anne Wojcicki, CEO and Co-Founder of 23andMe, are each investing $25 million in the PIPE and are joined by leading institutional investors, including funds managed by Fidelity Management & Research Company, Altimeter Capital, Casdin Capital, and Foresite Capital.
Advisors: Citi is serving as a lead financial advisor, capital markets advisor, and placement agent to 23andMe. Morgan, Lewis & Bockius is serving as legal counsel to 23andMe. Credit Suisse acted as a lead financial advisor, capital markets advisor, and placement agent to VG Acquisition Corp. LionTree Advisors acted as a financial advisor, and Davis Polk & Wardwell is serving as legal counsel to VG Acquisition Corp.
SPAC is an alternative way (for IPO) of entering the markets by combining with a group of investors formed to acquire another company.
Recent SPAC Deals
A blank-check acquisition firm backed by veteran investment banker Alan Mnuchin is in talks to merge with digital health startup Sharecare and take it public.
Telehealth company Hims & Hers went public via a $1.6 billion SPAC deal. The company’s share is trading on the NYSE under the symbol HIMS. Hims & Hers is backed by $150 million funding. Investors include Founders Fund, McKesson Ventures, Canadian Pension Plan Investment Board, Atomic, and others.
Talkspace said it is entering the public market via a $1.4 billion SPAC deal. According to the Talkspace, for 2021, its estimated net revenues were $125 million, up approximately 69% from 2020 estimated net revenue. The company has raised over $100 VC funding to date from Revolution Growth, Norwest Venture Partners, Qumra Capital, Spark Capital, Compound Ventures, SoftBank, TheTime, and others.