Sunday, 7 February 2021

23andMe to merge with Richard Branson's company VG Acquisition Corp

It has been an interesting start to the year in the genetic genealogy world. In January came news of the merger of MyDNA with FamilyTreeDNA and Gene by Gene. Then we heard that Ancestry were abandoning their health test and that they had appointed a new CEO and a new Chairman of the Board, potentially signalling a change of a direction and a return to their core business of genealogy.

Now we have news that 23andMe has entered into a deal to merge with Richard Branson's company VG Acquisition Corp (VGAC). VGAC is what is known as a special acquisition company (SPAC), otherwise known as a blank cheque company, which is formed by groups of investors who have set up the company with the sole purpose of making acquisitions and to get them quoted on the stock exchange.

The deal values 23andMe at around $3.5 billion. The transaction is expected to be completed by the end of the second quarter of 2021. Once the transaction has been completed the new merged company will trade on the New York Stock Exchange under the name ME.

As a result of this move, the combined company will have access to a cash fund of around $900 million which will be used to invest in "key growth initiatives across 23andMe’s consumer health and therapeutics businesses".

What are the implications for genetic genealogy?
23andMe is now firmly positioning itself as a personalised healthcare and drug development company and it very much looks as though the investment money is going to be used to expand that side of the business rather than focus on genealogy. 23andMe shared an interesting slide deck from a presentation they gave to investors. The ancestry reports are to be used as the "mass entry point to building a revolutionary database". They will therefore need to ensure that these reports are regularly updated and presented in an appealing way.

From a personal perspective I don't think we will notice much difference. 23andMe has never been particularly useful for genealogy because about 90% of the database is in the US and I've never really had any useful matches at 23andMe. I have, however, found the health and trait reports interesting to read and the company provides some very useful educational material.

I'm hoping that with Richard Branson's involvement 23andMe might pay a bit more attention to their customers outside the US. In October 2020 they launched a new subscription service known as 23andMe+. The subscription costs a modest sum of $29 a year and provides access to pharmacogenetic reports, enhanced ancestry features and access to new reports and features, but is currently restricted to US residents.

We probably won't see any changes until the transaction has been completed but it will be interesting to see how the money gets spent and how the company develops in the next few years.

Further reading

1 comment:

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