Regeneron declines to make higher bid for 23andMe after Wojcicki's $305 million offer

Regeneron Pharmaceuticals declined to counter Anne Wojcicki's $305 million bid for 23andMe, allowing the company's co-founder to regain control after Regeneron initially bid $256 million to acquire the bankrupt DNA-testing firm. 23andMe filed for bankruptcy in March following declining demand and a significant data breach, and Wojcicki's acquisition, expected to close soon, commits to upholding existing privacy policies.

Analysis

Regeneron Pharmaceuticals (REGN.O) has opted not to submit a revised, higher bid for the bankrupt genetic testing firm 23andMe (MEHCQ.PK), following an increased offer of $305 million from a non-profit controlled by 23andMe's co-founder, Anne Wojcicki. Regeneron's initial winning bid in the bankruptcy auction was $256 million, which was subsequently surpassed by Wojcicki's entity, TTAM Research Institute. 23andMe filed for bankruptcy in March due to declining demand for its DNA testing services and a significant 2023 data breach that exposed sensitive information of millions of customers. Regeneron had previously indicated a willingness to make a new bid contingent on a $10 million breakup fee if Wojcicki's offer was ultimately accepted, but has now decided against pursuing the acquisition further. A Regeneron spokesperson reiterated the company's commitment to its existing genetics-based research and therapeutics programs, including the Regeneron Genetics Center. Wojcicki's successful bid is anticipated to close following a court hearing scheduled for June 17, with TTAM Research Institute stating it will uphold 23andMe's current privacy policies and comply with data protection laws, a critical assurance given the company's past data security issues.

Key Decisions for Investors

• For Regeneron investors, the decision not to engage in a bidding war for 23andMe demonstrates prudent capital allocation and a focus on its established internal genetics research, likely having a neutral to slightly positive impact by avoiding integration risks of a distressed asset.
• Investors should recognize that while Anne Wojcicki's acquisition provides a path out of bankruptcy for 23andMe, the company still faces substantial headwinds from diminished consumer demand and the reputational damage of the 2023 data breach, requiring careful monitoring of its recovery strategy under new-old leadership.
• The 23andMe auction outcome serves as a reminder of the significant risks and valuation complexities associated with acquiring companies in the direct-to-consumer genetics market, especially those grappling with cybersecurity failures and shifting consumer interest.