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23andMe's merger with Branson aid almost done
The SPAC (special purpose acquisition company) founded by the billionaire Richard Branson, VG Acquisition Corp., has successfully entered a deal to merge with 23andMe, a consumer DNA-testing company last February.
Other investors include Casdin Capital, Foresite Capital, Fidelity Management & Research Company LLC and Altimeter Capital. The current shareholders of 23andMe need not to worry as they will own 81% of the combined company, and it is expected that the deal will be done soon around 2nd or 3rd quarter of 2021.
The merger decision of 23andMe with a special purpose acquisition company, or SPAC, gives them the benefit of going public without holding an initial public offering or uncertainty.
The input of new capital gives the company to further expand its efforts in developing therapeutics using its database of genetic information, along with a possible expansion of the company's reach on the consumer front.
SPACs are currently a popular way for companies to go public especially in the past year. The expected pro forma cash balance of the combined company will be around $900 million and once the deal is closed, VGAC will be switching its ticket to ME to start trading on the New York Stock Exchange.
The main product of 23andMe is a genetic testing kit, and unlike other testing kits, they provide a direct-to-consumer genetic testing kits which contains all instructions on how to use the kit and how to send the results back to the company to complete the tests. The company was co-founded by Wojcicki in 2006 with the original goal of using genetics to identify potential health risks using a $1000 test kit.
Though they encountered regulatory issues back then that forced the product to be pulled out in the market, they switched their attack to ancestry testing which was latter approved by the Food and Drug Administration.
23andMe had a fair share of their ups and downs, but continued to prove that DNA testing can offer more what the consumers are getting before. They expended no effort to turn genetic data into therapies and develop drugs, but since drug development is expensive, the merger was set in place.
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