The consumer DNA testing company 23andMe Inc. announced Thursday plans to go public. The company will be listed under the VGAC ticker on the New York Stock Exchange, before changing to the ME ticker when the deal is finalized, which is expected in the second quarter of 2021..
23andMe isn’t doing a traditional IPO, but rather following the popular trend of using a SPAC (Special Purpose Acquisition Company), a blank-check company formed solely for the purpose of raising capital through an initial public offering, in this case run by Virgin founder and billionaire Richard Branson.
The terms of the deal, according to a company press release, will value the company at $3.5 billion.
“Of the hundreds of companies we reviewed for our SPAC, 23andMe stands head and shoulders above the rest,” said Sir Richard Branson, Virgin Group founder in a press release. “As an early investor, I have seen 23andMe develop into a company with enormous growth potential.”
23andMe CEO and co-founder Anne Wojcicki said the opportunity to partner with Branson in this SPAC would "help personalize the entire experience at scale" and pointed to the potential healthcare aspects of DNA testing, which often play second-fiddle to more curiosity-based questions regarding people’s backgrounds.
The company will receive $759 million in the transaction. Branson and Wojcicki are putting in $25 million each, joining institutional investors including Fidelity Management & Research Company, Altimeter Capital, Casdin Capital, and Foresite Capital, for $250 million of capital.
An SPAC is known as a “blank-check” company because it is essentially a shell company that is public, then acquires a private company, taking it public in the process — a move that sidesteps much of the process of a traditional IPO, including uncertainty and copious financial disclosure.
23andMe, which was founded in 2006, is the latest in a string of companies that have opted to go public via this method, which along with the direct listing has upended the traditional path of an IPO that opens the books to investors and then woos them with a roadshow.
The business of genetic testing experienced quick growth from its novelty, but has been plagued to some extent by privacy concerns and lower demand as those who wanted to get tested did so.
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Ethan Wolff-Mann is a writer at Yahoo Finance focusing on consumer issues, personal finance, retail, airlines, and more. Follow him on Twitter @ewolffmann.
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