The consumer DNA-testing company 23andMe will go public by merging with VG Acquisition VGAC, a special-purpose-acquisition company sponsored by Richard Branson's Virgin Group, a transaction that will value 23andMe at $3.5 billion.
Shares of VG Acquisition at last check were up 15% at $15.44.
The deal is expected to be completed in the second quarter. The combined company will trade under the ticker symbol ME, the companies said Thursday.
At closing, the combined company will have a cash balance exceeding $900 million.
Chief Executive Anne Wojcicki and Branson each will invest $25 million into a $250 million private investment in a public equity offering.
They are being joined by institutional investors including Fidelity Management & Research, Altimeter Capital, Casdin Capital and Foresite Capital.
23andMe's current equity holders will roll 100% of their equity into the combined company.
Located in Sunnyvale, Calif., 23andMe, which Wojcicki co-founded in 2006, provides direct-to-consumer genetic testing services. Customers provide saliva samples for analysis.
The company's name is derived from the fact that a normal human cell includes 23 pairs of chromosomes.
23andMe said it offers its customers the option to participate in genetic research. To date, more than 80% of customers have chosen to do so.
"Of the hundreds of companies we reviewed for our SPAC, 23andMe stands head and shoulders above the rest," Branson said in a statement. "As an early investor, I have seen 23andMe develop into a company with enormous growth potential."
Mergers through SPACs, also known as blank-check companies, surged last year and have accounted for 82% of IPOs so far this year, according to SPAC Analytics.