23andMe going public with Richard Branson’s blank-cheque firm

4 Feb 2021

Image: © michelmond/Stock.adobe.com

The merger with Branson’s special purpose vehicle will value the DNA testing company at $3.5bn and take it to the public markets.

Genetics and DNA testing company 23andMe is going public through a merger with a blank-cheque firm backed by Richard Branson.

23andMe will merge with a special purpose acquisition company (SPAC) called VG Acquisition Corp, set up by Richard Branson and Virgin Group. The combined entity will trade on the New York Stock Exchange and will value 23andMe at $3.5bn.

Going public through SPAC mergers became very popular for companies in the last two years. Virgin Galactic, Opendoor, DraftKings and Nikola all availed of the technique rather than the traditional public listing route.

A SPAC is a blank-cheque shell company with no actual business, which lists publicly for the purposes of merging with another established company. This takes that established company onto the public market without the administration and long lead time of a regular IPO.

23andMe and VG Acquisition Corp are expected to close their merger in the second quarter of this year.

Branson said hundreds of companies were considered for the merger with his vehicle before settling on 23andMe.

“As an early investor, I have seen 23andMe develop into a company with enormous growth potential,” he said.

Chief executive of 23andMe Anne Wojcicki added the deal will “create new opportunities to revolutionise personalised healthcare and medicine”.

The deal will give the company $984m in cash, it said, to fund further product development and recruitment.

Founded in 2006, the company sells at-home DNA testing kits and collects and shares anonymised data with third parties for research. While the company is 15 years old, it had eschewed a public listing for years unlike many start-ups on a similar trajectory. It has raised around $860m from investors including GlaxoSmithKline and Sequoia Capital.

The SPAC craze reached a fever pitch in 2020 and shows no immediate signs of slowing down, with investors lining up to create investment vehicles and hunt down private companies and take them public. Basketball star Shaquille O’Neal and three former Disney executives have established a SPAC of their own and plan to raise $250m before merging with a target company.

Jonathan Keane is a freelance business and technology journalist based in Dublin