23andMe – Going Public through a SPAC Merger

Case Code: FINC204
Case Length: 11 Pages
Period: 2020-21
Pub Date: 2023
Teaching Note: Available

Price: Rs.200
Organization: 23andMe Holding Co
Industry: Healthcare and Services
Countries: United States
Themes: Capital Markets & Investments, Stock Market

Abstract Case Intro 1 Case Intro 2 Excerpts

Excerpts

SPAC VS IPO

SPACs started gaining popularity due to the uncertainty associated with IPOs. IPOs involved a lot of investment in roadshows, getting valuations, negotiating with investors, and getting institutional investors. There was also the risk of the IPOs not attracting enough investors, due to which they could be cancelled..

About 23andMe

Based in Sunnyvale, California, 23andMe was founded by Wojcicki , Linda Avey, and Paul Cusenzain in 2006 . With the idea that genetic testing was not limited to the medical field but was a consumer business, it launched home-testing kits. Using these kits , people could get to know their genetic profiles and ancestry..

Virgin’s SPAC

Travel and leisure was the main business of the Virgin Group, founded during the 1970s.The Group owned more than 40 companies. The travel and leisure business was severely hit by the Covid-19 pandemic..

The Merger

Branson was an early investor in 23andMe and when he was looking around for a company to take to the stock market through his SPAC, he found 23andMe an ideal candidate..

What next?

For the quarter ending September 30, 2021, the company recorded a net loss of US$ 16.5 million, while the revenue was US$ 55.2 million (Refer to Exhibit IV for the Profit and Loss Account of the Merged Entity)..

Exhibits

Exhibit I: Drug Development Stages of Different Drugs at 23andMe
Exhibit II: Shareholding Pattern in the New Merged Entity 23andMe
Exhibit III: Shareholders Composition of the Merger Entity
Exhibit IV: Profit and Loss Account of the Merged Entity

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