23andMe in Talks to Go Public Via Branson SPAC

Consumer DNA-testing company 23andMe Inc. is in talks to go public through a roughly $4 billion deal with VG Acquisition Corp., a special purpose acquisition company founded by billionaire Richard Branson, according to people familiar with the matter.

A deal could be announced in the coming weeks if talks are successful, said the people, who asked not to be identified because the information was private. Discussions could still fall apart, the people said.

In funding rounds in both 2018 and 2020, 23andMe had a $2.5 billion valuation, separate people familiar with the matter said. A merger with a special purpose acquisition company, or SPAC, would allow 23andMe to go public without the risk or uncertainty of holding an initial public offering.

Shares of VG Acquisition jumped as much as 18% before being temporarily halted in New York trading Wednesday. They they closed down 0.7% to $13.55 apiece.

Representatives for 23andMe and VG Acquisition declined to comment.

23andMe in Talks to Go Public Via Branson SPAC

Co-founded in 2006 by Anne Wojcicki, 23andMe sells direct-to-consumer genetic testing kits. The company launched with the aim of using genetics to kick start a personalized health-care revolution, with a $1,000 test that could alert customers to potential health risks.

It was forced to pull the product from market by the Food and Drug Administration, pivoting to ancestry testing and later re-launching a health-care test after gaining agency approval.

Recently, 23andMe has doubled down on efforts to turn its trove of genetic data into therapeutics -- a move that may inspire consumers who want to contribute to genetic research to buy the company’s kits. Last year, it licensed a drug developed in-house to another company, and it also has a deal to collaborate on drug development with GlaxoSmithKline Plc, which took a $300 million stake in the company in 2018.

Covid Calculator

When the Covid-19 pandemic began last year, 23andMe launched a million-person study to look at how genomics and other factors contribute to how severely ill those who contract the virus become. To show how that research benefits customers, on Wednesday it launched its COVID-19 Severity Calculator, which calculates a person’s risk of being hospitalized due to the virus.

23andMe has raised $869 million in private funding to date and counts Sequoia Capital and Fidelity Management among its backers. The company cut jobs at the beginning of 2020 as the once-booming genetic testing business slowed on consumer concerns over privacy.

Rival Ancestry.com Inc. also cut jobs last year after two years of rapid growth. Blackstone Group Inc. in December bought a majority stake in Ancestry that valued it at $4.7 billion.

VG Acquisition raised $509 million through an initial public offering in October. Although Branson is the founder, he isn’t a director of the company. The blank-check firm intends to search for targets that operate in consumer-facing industries in the U.S. and Western Europe, according to its prospectus.

Branson, with a net worth of $6.9 billion, according to the Bloomberg Billionaires Index, has been involved in SPACs before. Virgin Galactic Holdings Inc., a space tourism company founded by the 70-year-old entrepreneur, went public through a reverse merger with one of Chamath Palihapitiya’s blank-check companies in 2019, one of the first high-profile deals that set off the SPAC boom.

23andMe’s co-founder, Wojcicki, is also on the board of a SPAC named Ajax I. The company raised about $800 million in October to acquire targets in the internet, software, financial technology or consumer industries, filing showed.

©2021 Bloomberg L.P.

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