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23andMe was hit with a massive data breach last year and has lost most of its board members, but the CEO is still determined to take the company private.
DNA-testing company 23andMe is in a state of turmoil as nearly all of its board members have resigned, hindering its CEO’s plan to take the company private.
The dispute stems from the attempt of CEO and co-founder Anne Wojcicki to buy out the shares of these board members and take the company private – Wojcicki currently holds 49pc of the company’s voting shares. The resignation of seven board members caused the share price of 23andMe to fall to its lowest levels.
23andMe has been in a poor financial position for years, with its share price falling to extremely low levels since it went public in 2021, with some publications referring to it as a penny stock. This problem was only made worse after the company suffered a massive data breach last year, which saw a threat actor steal personal data from nearly 7m customers.
This data breach led to investigations from UK and Canadian watchdogs and the company recently agreed to pay $30m to settle a lawsuit over the data breach.
Troubles going private
As a result of dwindling financial results, the board formed a special committee earlier this year to explore potential options for the company and its future.
The discussion of a buyout has been going on for months, but the seven independent board members have rejected Wojcicki’s proposals and resigned, leaving her as the only remaining member. One of the board members who resigned is Neal Mohan, who became the CEO of YouTube last year after Susan Wojcicki stepped down.
The board members claim that they have not received a “fully financed, fully diligenced, actionable proposal that is in the best interests of the non-affiliated shareholders” from Wojcicki.
“While we continue to wholeheartedly support the company’s mission and believe deeply in the value of the personalised health and wellness offering that you have articulated, it is also clear that we differ on the strategic direction for the company going forward,” the board said in a letter.
“Because of that difference and because of your concentrated voting power, we believe that it is in the best interests of the company’s shareholders that we resign from the board rather than have a protracted and distracting difference of view with you as to the direction of the company.”
In an internal memo to employees shared by CNBC, Wojcicki said she is “surprised and disappointed” by the decision of these board members and that she is looking for new independent directors.
“I continue to believe that we will be better positioned to achieve our mission and goals outside of the short-term pressures of the public markets and that taking 23andMe private will be the best opportunity for long-term success,” Wojcicki said.
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