SCHEDULE 13D/A: 23andMe Receives $2.53 Per Share Take-Private Proposal from Co-Founder Anne Wojcicki and New Mountain Capital

23andMe Holding Co. has received a non-binding proposal from co-founder Anne Wojcicki and New Mountain Capital L.L.C. to acquire all outstanding shares not already owned by Ms. Wojcicki and her affiliates for $2.53 per share in cash.

Summary

• Anne Wojcicki and New Mountain Capital L.L.C. have submitted a non-binding proposal to acquire all outstanding shares of 23andMe Holding Co. not owned by Ms. Wojcicki and her affiliates for cash consideration of $2.53 per share.
• The proposal represents an equity value of approximately $74.7 million.
• Ms. Wojcicki and New Mountain are willing to provide secured debt financing to the Company to fund operations through the closing of the potential transaction, if necessary.
• The proposal is subject to completion of due diligence, negotiation and execution of definitive documentation, receipt of material governmental consents, and the absence of any material adverse change.
• A critical condition for closing is the execution of final settlement agreements for all federal, state, and arbitration actions related to the Company's 2023 data breach, with no new material litigations or threats of injunctive relief related to the breach.
• The transaction will not be subject to any financing contingency.
• The proposal requires approval from the Special Committee of the Board of Directors and a non-waivable approval from a majority of the shares of common stock not owned by Ms. Wojcicki, rollover stockholders, or their affiliates.
• The proponents believe that going private will enable the Company to focus on executing long-term value creation initiatives.

Sentiment

Score: 6

Explanation: The proposal offers a clear path to liquidity for public shareholders at a specified price, and the financing for the acquisition is committed. However, the proposal is non-binding and subject to significant conditions, particularly the resolution of the data breach litigation, which introduces uncertainty. The company's substantial negative EBITDA also highlights underlying operational challenges.

Positives

• The proposal offers compelling value and immediate liquidity to the Company's public stockholders at $2.53 per share.
• The transaction is not subject to a financing contingency, indicating committed funding for the acquisition.
• Ms. Wojcicki and New Mountain are willing to provide secured debt financing to support the Company's operations until the transaction closes.
• The take-private structure is intended to allow the Company to focus on long-term value creation initiatives without the pressures of public market reporting.
• The proposal includes a non-waivable condition requiring approval from a majority of unaffiliated shareholders, providing a safeguard for minority interests.

Negatives

• The proposal is non-binding and subject to significant conditions, including extensive due diligence and negotiation of definitive agreements, meaning there is no guarantee the transaction will close.
• The Company reported negative Adjusted EBITDA of ($176) million for FY2024 and ($59) million for the last 9 months ended December 2024 (YTD Q3 FY2025), indicating ongoing operational losses.
• The closing of the transaction is heavily contingent on the resolution of all legal actions related to the 2023 data breach, which could be a complex and time-consuming process.

Risks

• The closing of the transaction is contingent on the execution of final settlement agreements for federal, state, and arbitration actions related to the Company's 2023 data breach, and the absence of new material litigations or threats of injunctive relief related to the breach.
• The proposal is subject to the absence of any material adverse change in the business, assets, condition (financial or otherwise), results of operations, cash flows, or properties of the Company and its subsidiaries.
• The transaction requires the receipt of all material governmental consents and approvals.
• The proposal is non-binding and may be modified or withdrawn at any time by the Reporting Persons and New Mountain.
• Completion of due diligence by New Mountain and its advisors is a condition for the proposal to proceed.

Future Outlook

The proponents believe that taking the Company private is the best course of action, as it will enable 23andMe to focus on executing long-term value creation initiatives, implying a strategic shift away from public market pressures and towards sustained, potentially longer-term, growth strategies.

Management Comments

• "We believe that our Proposal provides compelling value and immediate liquidity to the Company's public stockholders."
• "Ms. Wojcicki and New Mountain would be willing to provide secured debt financing to the Company to finance the operations of the Company and its subsidiaries through the closing of the Potential Transaction, as necessary."
• "The closing of the transaction will not be subject to any financing contingency."
• "Ms. Wojcicki will only engage in a Potential Transaction... if the Special Committee is empowered to consider (including the ability to reject) any such proposal by Ms. Wojcicki with the assistance of its own legal and financial advisors, and the Special Committee approves such proposal."
• "Ms. Wojcicki will only engage in a Potential Transaction... if, in addition to any other vote required, such transaction is subject to a non-waivable condition requiring approval of a majority of the shares of common stock of the Company not owned by Ms. Wojcicki, any other stockholders who are invited to roll over their shares, or any of their respective affiliates, and such approval is in fact obtained prior to the consummation of such transaction."
• "We believe the best course of action is for the Company to go private, which will enable it to focus on executing long-term value creation initiatives."
• "We believe that our Proposal provides significant value to the Company and its stockholders and that moving forward with our Proposal is in the best interests of the Company and its customers, employees, and unaffiliated stockholders."

Industry Context

The proposal for 23andMe to go private aligns with a broader industry trend where companies facing significant operational challenges, intense competition, or requiring substantial long-term investment without immediate public market returns opt for private ownership. This strategy allows for strategic restructuring, deeper investment cycles, and reduced scrutiny from quarterly earnings pressures, which is particularly relevant for a biotech/genomics company like 23andMe with long research and development cycles and recent operational losses.

Corporate Governance

Legal Proceedings

• The closing of the transaction is contingent on the execution by all parties of final settlement agreements relating to the federal, state, and arbitration actions concerning the Company's 2023 data breach.
• All conditions and court approvals contemplated by the Data Breach Settlement Agreements must be met or remain reasonably capable of being met.
• None of the Settlement Agreements should be terminated or subject to any court order declining to approve or enforce their terms.
• No additional material litigations, claims, complaints, or arbitrations relating to the Data Breach should have been initiated, pending, or threatened in writing since the signing of the definitive transaction agreement.
• No governmental authority, agency, or similar body shall have brought or commenced any claim, action, litigation, enforcement action, or similar action, or provided written notice of an intent to bring any of the foregoing, that imposes, or threatens to impose, injunctive relief on the Company as a result of the Data Breach or otherwise in respect of the handling and use of data.

Related Party Transactions

• The proposal itself is a related party transaction, as it is submitted by Anne Wojcicki, the co-founder and a significant beneficial owner of 23andMe, in conjunction with New Mountain Capital L.L.C. Ms. Wojcicki intends to roll over her current equity ownership as part of the transaction.

Stakeholder Impact

• **Shareholders**: Public stockholders are offered immediate liquidity at $2.53 per share. The non-waivable condition for approval by a majority of unaffiliated shares provides a mechanism for minority shareholder protection.
• **Employees**: Going private could allow the company to focus on long-term strategic initiatives, potentially stabilizing the business and its future, though specific impacts on employment are not detailed.
• **Customers**: The proponents state that the proposal is in the best interests of the Company and its customers, implying a continued commitment to service and product development.
• **Creditors**: The willingness of Ms. Wojcicki and New Mountain to provide secured debt financing for operations through closing suggests a commitment to maintaining financial stability during the transition period.

Next Steps

• The Special Committee of the Board of Directors is expected to consider the proposal with the assistance of its own legal and financial advisors.
• Ms. Wojcicki expects to make appropriate amendments to her Schedule 13D as required by securities laws.
• New Mountain and its advisors will work to complete remaining due diligence.
• Negotiation and execution of mutually agreeable definitive transaction agreements.
• Obtain all material governmental consents and approvals required for the transaction.
• Final settlement agreements relating to the 2023 data breach actions must be executed and all conditions and court approvals met.
• The transaction is subject to a non-waivable condition requiring approval of a majority of the shares of common stock not owned by Ms. Wojcicki, rollover stockholders, or their affiliates.
• The Reporting Persons and New Mountain intend to engage in discussions with the Special Committee regarding the terms of the proposal.
• The Reporting Persons do not intend to update additional disclosures regarding the proposal until a definitive agreement has been reached, or unless disclosure is otherwise required under applicable U.S. securities laws.

Key Dates

Recommendation

Keywords

23andMe, take-private, Anne Wojcicki, New Mountain Capital, acquisition proposal, SEC filing, Schedule 13D/A, genetic testing, biotechnology, data breach, private equity, shareholder liquidity