23andMe, a consumer genetics company, is going public via a merger with Richard Branson’s special-purpose acquisition corporation, or SPAC, VG Acquisition Corp., in a deal with an enterprise value of about $3.5 billion, the companies said Thursday.
SPACs, or blank-check companies, raise money in an initial public offering and then have two years to acquire a business or businesses. They have become a popular vehicle for IPOs during the pandemic, raising a record of $82 billion of proceeds in 2020, according to data provider Dealogic.
Once the deal has closed, the company will change its ticker symbol to “ME” and trade on the New York Stock Exchange.
23andMe co-Founder Anne Wojcicki and Branson, an early investor, are investing $25 million in the company, and will be joined by institutional investors including funds managed by Fidelity Management & Research Company LLC, Altimeter Capital, Casdin Capital and Foresite Capital.
The new company will have a pro forma cash balance of more than $900 million at closing. The deal is expected to close in the second quarter.
23andMe was founded in 2006 by Wojcicki, Linda Avey and Paul Cusenza and offers individuals the chance to have their genes tested, providing them with information on health risks and ancestry. Consumers can order one of the company’s test kits, comprising a test tube for saliva collection that is then mailed to a laboratory for testing.
“Through a genetics-based approach, we fundamentally believe we can transform the continuum of health care.,” Wojcicki said in a statement.
The Sunnyvale, California-based company’s website says it has more than 12 million customers and more than 80% have opted to participate in research, allowing the company create one of the biggest genomic data sets in the world.
The company has to date collected 3 billion phenotypic data points and published more than 150 peer-reviewed studies in scientific journals.
The 23 in the name references the 23 pairs of chromosomes in human DNA.
VG Acquisition shares rose 11% on the news.