Genetic testing company 23andMe filed for Chapter 11 bankruptcy protection to initiate the process of selling off its assets, while the troubled firm’s co-founder Anne Wojcicki—who was attempting to take 23andMe private—stepped down from her role with the intent to become an outside bidder for the asset sale.
23andMe filed for Chapter 11 bankruptcy on Sunday night.
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Key Takeaways
- In a press release, the company said it had initiated Chapter 11 proceedings before the Eastern District of Missouri federal bankruptcy court to “ facilitate a sale process to maximize the value of its business.”
- The genetics testing company said it will continue to operate its business while the asset sales process goes through, and there will be “no changes” made to how it “stores, manages, or protects customer data.”
- If the court approves the Chapter 11 plan, the company plans to solicit bids over 45 days and then conduct an auction if multiple bidders emerge.
- The statement said any potential buyer will be required to “comply with applicable law with respect to the treatment of customer data.”
News Peg
The DNA testing firm also announced its cofounder Anne Wojcicki was stepping down from her role as CEO, effective immediately, however, she will continue to serve as a member of 23andMe’s board.
Last month, Wojcicki partnered with investment firm New Mountain Capital to make a bid to purchase all of 23andMe’s outstanding shares for $2.53 per share, but the effort failed after the investment pulled out of the deal. In a follow-up bid earlier this month, the 23andMe cofounder offered to acquire the company’s outstanding shares for a much lower 41 cents each.
This was quickly rejected by the company’s special committee of independent directors. In a statement on X, Wojcicki announced her exit as CEO and wrote: “While I am disappointed that we have come to this conclusion and my bid was rejected, I am supportive of the company and I intend to be a bidder. I have resigned as CEO of the company so I can be in the best position to pursue the company as an independent bidder.”
Key Background
23andMe went public in 2021 after completing a merger with a Special Purpose Acquisition Company (SPAC). The genetic testing company’s market capitalisation peaked at $6 billion shortly after going public, with Wojcicki becoming a billionaire.
However, since then, the company’s share price has plummeted by more than 99% as it failed to turn a profit. In 2023, the company reported a major data breach, as hackers managed to gain access to user data through a recycled password attack.
The sensitive stolen data was shared on hacker forums and the sellers claimed it contained over a million genetic data points belonging to Ashkenazi Jews. The stolen data also reportedly featured unvalidated entries belonging to tech billionaires like Mark Zuckerberg and Elon Musk.
The hackers managed to access details about the affected users’ sex, birth year, genetic ancestry results and geographic ancestry information. After being taken to court over the breach, 23andMe agreed to settle the case by paying $30 million and providing three years of security monitoring for the impacted users.
