23andMe back on the auction block after former CEO makes 11th-hour bid

23andMe's planned acquisition by Regeneron for $256 million is now contested after founder Anne Wojcicki, via TTAM Research Institute, submitted a higher $305 million bid, prompting a reopened auction process. Regeneron, despite agreeing to the secondary sale, alleges unfair treatment and accuses TTAM and 23andMe of violating bidding procedures, while also highlighting privacy concerns following customer data deletions. The outcome of the auction will determine control of 23andMe's valuable DNA data, with the losing bidder receiving a $10 million breakup fee.

Analysis

The acquisition of bankrupt DNA testing company 23andMe (ME) has been thrown into disarray following a new, higher bid from its founder, Anne Wojcicki, through TTAM Research Institute. An initial $256 million purchase agreement with Regeneron Pharmaceuticals Inc (REGN), reached after an April auction, is now superseded by TTAM's $305 million offer, which will serve as the starting price in a reopened sale process. Regeneron can submit a competing bid at least $10 million higher, with a $10 million breakup fee for the losing party. This development, carrying a moderately negative sentiment (-0.55 overall; -0.8 for ME, -0.7 for REGN), reignites concerns over the control and use of 23andMe's extensive DNA database, which has previously led customers to delete their data. Regeneron had committed to upholding privacy policies and working with regulators. However, Regeneron has formally protested the reopening, alleging unfair treatment and violations of court-ordered bidding procedures by TTAM and 23andMe, citing rules against late bids and Wojcicki's previous unsuccessful attempts to acquire the company, suggesting the auction process was used for price discovery. The situation introduces significant uncertainty and legal contention into the resolution of 23andMe's bankruptcy and the future stewardship of its sensitive genetic data.

Key Decisions for Investors

• Investors in 23andMe (ME) should exercise extreme caution due to its bankruptcy status and the highly uncertain outcome of the contested sale process; any perceived increase in sale price is offset by inherent risks and negative sentiment.
• Regeneron (REGN) investors should monitor the potential for an increased acquisition cost if it pursues 23andMe, or the implications of receiving the breakup fee, alongside the legal costs and reputational considerations arising from the disputed auction.
• The heightened focus on data privacy and regulatory compliance surrounding 23andMe's assets remains a critical factor, suggesting that the ultimate acquirer will face ongoing scrutiny and potential liabilities, irrespective of the final sale price.