VG Acquisition Corporation

VG Acquisition Corporation

Oct 19, 2020 by Roman Developer

PROPOSED BUSINESS COMBINATION: 23andMe

ENTERPRISE VALUE: $3.5 billion
ANTICIPATED SYMBOL:  ME

23andMe, Inc., a leading consumer genetics and research company, and VG Acquisition Corp., announced that they have entered into a definitive merger agreement. Upon completion of the transaction, estimated in the second calendar quarter of 2021, VGAC will change its New York Stock Exchange (NYSE) ticker symbol, and the combined company’s securities will trade under the ticker symbol “ME”.

23andMe’s mission is to help people access, understand and benefit from the human genome. The company pioneered direct-to-consumer genetic testing, giving consumers unique, personalized information about their genetic health risks, ancestry and traits. 23andMe is the only consumer genetic testing company with multiple FDA clearances for over-the-counter health and carrier status reports. The company is dedicated to empowering its customers with information they can use to make better decisions about their healthcare, helping them to live healthier lives.

23andMe offers its customers the option to participate in genetic research. To date, more than 80% of customers have chosen to participate. This participation, which has helped create a premier re-contactable database for genetic research, enables 23andMe to analyze genotypic and phenotypic data and to discover new genetic insights. These insights unlock future opportunities across health, therapeutics and other areas. 23andMe’s dedicated therapeutics group leverages the company’s research platform to help discover novel treatments for patients with serious unmet medical needs. The company has generated a broad pipeline of more than 30 therapeutic programs, spanning oncology, respiratory, cardiovascular diseases and more.


TRANSACTION

The transaction is expected to deliver up to $759 million of gross proceeds through the contribution of up to $509 million of cash held in VG Acquisition Corp.’s trust account and a concurrent $250 million private placement (PIPE) of common stock, priced at $10.00 per share.

As part of the transaction, 23andMe’s existing equity holders will roll 100% of their equity into the combined company. Assuming no public shareholders of VG Acquisition Corp. exercise their redemption rights, 23andMe will be capitalized with up to $984 million in cash to fund operations and support new and existing growth initiatives.



PIPE

  • $250 million private placement (PIPE) of common stock, priced at $10.00 per share. Sir Richard Branson, Founder of the Virgin Group, and Anne Wojcicki, CEO and Co-Founder of 23andMe, are each investing $25 million in the PIPE and are joined by leading institutional investors, including funds managed by Fidelity Management & Research Company LLC, Altimeter Capital, Casdin Capital and Foresite Capital.

EARNOUT

  • The Sponsor has agreed that 30% of the shares of common stock of VGAC held by the Sponsor as of the date of the Sponsor Agreement (the “Earn-Out Shares”) will be subject to a lockup of seven years. The lockup has an early release effective:
    • (i) with respect to 50% of the Earn-Out Shares, upon the closing price of the New 23andMe Class A Common Stock equaling or exceeding $12.50 per share for any 20 trading days within any 30- trading day period and
    • (i) with respect to 50% of the Earn-Out Shares, upon the closing price of the New 23andMe Class A Common Stock equaling or exceeding $12.50 per share for any 20 trading days within any 30- trading day period and

VOTING AND SUPPORT AGREEMENTS

  • Certain stockholders of 23andMe and VGAC entered into support agreements with VGAC and 23andMe, pursuant to which the Voting Stockholders have agreed to, among other things:
    • (i) vote in favor of the Merger Agreement and the transactions contemplated thereby and
    • (ii) be bound by certain other covenants and agreements related to the Business Combination

NOTABLE CONDITIONS TO CLOSE

  • Aggregate cash proceeds from VGAC’s trust account, together with the proceeds from the PIPE Financing (as defined below), must equal no less than $500,000,000 (after deducting any amounts paid to VGAC shareholders that exercise their redemption rights in connection with the Business Combination)

NOTABLE CONDITIONS TO TERMINATION

  • Either VGAC or 23andMe can terminate if the Business Combination is not consummated by September 30, 2021

ADVISORS

  • Citi is serving as lead financial advisor, capital markets advisor and placement agent to 23andMe
  • Morgan, Lewis & Bockius LLP is serving as legal counsel to 23andMe
  • Credit Suisse acted as lead financial advisor, capital markets advisor and placement agent to VG Acquisition Corp
  • LionTree Advisors acted as financial advisor and Davis Polk & Wardwell LLP is serving as legal counsel to VG Acquisition Corp

MANAGEMENT & BOARD


Executive Officers

Josh Bayliss, 47
Chief Executive Officer and Director

Since 2011, Mr. Bayliss has served as the Chief Executive Officer of the Virgin Group and has been responsible for the Group’s strategic development, licensing of the brand globally, and management of direct investments on behalf of the Virgin Group in various branded and unbranded companies around the world. From 2005 to 2011, Mr. Bayliss served as General Counsel of the Virgin Group. Prior to joining Virgin, Mr. Bayliss was a senior associate at Slaughter and May, a leading international law firm. Mr. Bayliss has extensive experience as a director of a large number of companies across the Virgin Group globally, and currently serves as a director of Virgin Red (2018 – present), Virgin’s group-wide loyalty program that is currently in development. Mr. Bayliss holds a Bachelor of Laws and Bachelor of Arts from the University of Auckland, New Zealand.


Evan Lovell, 50
Chief Financial Officer and Director

Since 2012, Mr. Lovell has served as the Chief Investment Officer of the Virgin Group, where he has been responsible for managing the Group’s portfolio and investments in North America. From 2008 to 2012, Mr. Lovell was the Founding Partner of Virgin Green Fund, a private equity fund investing in the renewable energy and resource efficiency sectors. From 1998 to 2008, Mr. Lovell served as an investment professional at TPG Capital, where he also served on the board of directors of a number of TPG portfolio companies. Mr. Lovell currently serves on the boards of several companies including Virgin Hotels (2012 – present), Virgin Voyages (2014 – present), BMR Energy (2016 – present), Virgin Galactic (2017 – present), and Virgin Orbit (2017 – present). Mr. Lovell previously served on the board of Virgin America (NASDAQ: VA) from 2013 until its acquisition by Alaska Air in 2016. Mr. Lovell holds a Bachelor’s Degree from the University of Vermont.


 

Board of Directors

Teresa Briggs, 60
Director

Ms. Briggs served as Vice Chair & West Region and San Francisco Managing Partner of Deloitte LLP, a global professional services firm, from June 2011 to April 2019, and as Managing Partner, Silicon Valley from June 2006 to June 2011. Ms. Briggs currently serves on the board of directors of Snowflake, Inc. (NYSE: SNOW), ServiceNow, Inc. (NYSE: NOW), DocuSign, Inc. (NASDAQ: DOCU), and JAND, Inc. (dba Warby Parker), and previously served on the board of directors of Deloitte USA LLP from January 2016 to March 2019. Ms. Briggs also served as an adjunct member of Deloitte’s Center for Board Effectiveness. In 2019, she was a Distinguished Careers Fellow at Stanford University. Ms. Briggs holds a B.S. degree in Accounting from the University of Arizona, Eller College of Management. We believe that Ms. Briggs will be a valuable member of our board of directors because her extensive network across the technology sector will enhance our sourcing processes and her financial expertise will support our review of potential investment opportunities.


James B. Lockhart III, 74
Director

Mr. Lockhart served as the Vice Chairman of WL Ross & Co. LLC, a New York City based private equity firm owned by Invesco, leading their financial services team from 2009 through 2018. Prior to joining WL Ross & Co., Mr. Lockhart served as the Director of the Federal Housing Finance Agency and Chairman of its Oversight Board, Director of its predecessor agency, the Office of Federal Housing Enterprise Oversight, and as a member of the Troubled Asset Relief Program’s Financial Stability Oversight Board. Prior to that, he served as the Principal Deputy Commissioner and Chief Operating Officer at the Social Security Administration. Mr. Lockhart previously served on the board of directors of several public companies, including Cascade Bancorp (NASDAQ: CACB), Sun Bancorp (NASDAQ: SNBC), and Virgin Money Holdings U.K. (LSE: VMUK). Mr. Lockhart served as a Lieutenant (j.g.) on a nuclear submarine in the U.S. Navy, and holds an MBA from Harvard University and a BA from Yale University.


Douglas R. Brown, 66
Director 

Mr. Brown founded AquaVenture Holdings LLC (NYSE: WAAS), a multinational provider of Water as a Service® solutions, in December 2006 and served as Chairman from January 2007 until the company’s acquisition by Culligan in March 2020. Mr. Brown served as chief executive officer of AquaVenture Holdings LLC from January 2007 to October 2012 and from October 2014 to December 2018. Mr. Brown has also served as chief executive officer of Seven Seas Water Corporation from January 2007 to October 2012 and from October 2014 to December 2018. From 2003 to 2005 Mr. Brown served as the chief executive officer of Ionics, Incorporated (NYSE: ION), a water purification technology company that was sold to General Electric in 2005. Before joining Ionics, Mr. Brown spent 17 years at Advent International, a global private equity firm, the last 7 years of which he was chief executive officer. He also serves as an operating partner and senior advisor of Element Partners, a private equity firm. Mr. Brown received a B.S. in Chemical Engineering from Massachusetts Institute of Technology and an M.B.A. from Harvard Business School.