Investment firm Blackstone recently announced that it was purchasing a majority stake in the direct-to-consumer genetics company Ancestry from the earlier equity holders for a whopping amount of $4.7 billion. The firm will take over from global firms like Silver Lake, GIC, and Spectrum Equity, though GIC will retain a significant minority stake in the company. Genetics company Ancestry was last valued at roughly $3 billion in the year 2017, and also eyed an IPO in 2017 and 2019.
Slumping sales have brought difficulties for Ancestry and its primary competitor, 23andMe, in recent times. In February, Ancestry laid off 6% of its total staff, citing slowdowns in demand in the market. Earlier, 23andMe laid off a certain amount of workers, at around 14% of its total staff. Also recently, 23andMe launched a subscription service named 23andMe Premium that costs the premium subscribed members $10 per month or $79 per year for access to the exclusive health reports based on the latest research. “The business landscape fell drastically last year,” said Laura Hercher, director of human genetics research at Sarah Lawrence College. “Fads pass.”
Blackstone to Acquire Ancestry
Blackstone HQ
In response to the downfall, Ancestry rolled out a slew of new products that were aimed at strengthening its offerings in the health arena. But unlike 23andMe, Ancestry company has not yet concretely linked its data wealth on family history to the kinds of genetic-related health information that consumers look for most. Ancestry has an “enormous database which inherently has a great value hidden in it — potential energy,” said Hercher. “But they have not figured out yet how to get the information out in the way like 23andMe.”
Blackstone’s Deal of Ancestry
The Ancestry’s company deal with Blackstone appears aimed at just that— to get the information out and expand Ancestry’s appeal in the international markets. The company, which operates across 30+ countries and is the largest consumer DNA database in the world, stated that it is generating revenues of $1 billion every year. “Looking ahead of the collaboration with Blackstone, we will continue to promote our unique content, powerhouse consumer brand and technology platform to expand the global Family History business. We also aim to bring to life our long-term visions of personalized preventive health,” Ancestry CEO Margo Georgiadis stated. As of November 2018, Ancestry company claimed to have sold off 18 million DNA kits and provided access to around estimated 10 billion historical records. The company also stated that its ancestry subscription service has 3 million paying customers and the services cost around $25 to $50 per month or $100 to $200 every six months