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Ginkgo Bioworks to Go Public Via a Colossal SPAC Deal Valued at $17.5 Billion
On May 11th, Ginkgo Bioworks and Soaring Eagle Acquisition Corp. agreed to a merger in what is one of the largest SPAC deals to date. Totaling $17.5 billion, the deal has resulted in the Boston-based “Organism Company” going public. In light of the news, Soaring Eagle’s stock was up early in the day after the deal was confirmed, but it closed -0.70% down. In comparison, the Nasdaq closed only 0.09% lower.
Founded in 2008, Ginkgo specializes in reprogramming organisms by using nature’s “code,” i.e. modifying their DNA. Their groundbreaking approach earned it a place in CNBC’s Disruptor 50 list of 2020. Their products range from the production of next-generation antibiotics, modifying strains for sustainable agriculture, culturing ingredients for flavor and fragrances, and many others. To accomplish this, it has built a scalable engineering and data platform that incorporates robotic automation, proprietary software, and data analytics.
Ginkgo earns usage-earn revenues as well as royalties from products that go into the market or equity into the partner company. In 2021, its revenue is expected to reach $150 million, almost a 100% increase over the previous year. After a financing round in 2020, Ginkgo was valued at $4.86 billion.
Merger with Soaring Eagle
The deal includes a $15 billion valuation for Ginkgo, which is triple its previous estimate, and $2.5 billion in cash proceeds. Eagle Equity Partners and Bellco Capital are co-sponsoring the transaction. Of the cash proceeds, $775 million will come from institutional investors in an oversubscribed Private Investment in Public Equity (PIPE) transaction. The PIPE is being led by Baillie Gifford, Putnam Investments, and Morgan Stanley Investment Management’s Counterpoint Global arm.
The fundraising also saw participation from new and existing investors, including Cathie Wood’s ARK Investment Management LLC, Bill Gates’s Cascade Investment LLC, ArrowMark Partners, T. Rowe Price Associates Inc., Bain Capital Public Equity, and Berkshire Partners.
When the deal closes, the Ginkgo merger would be the biggest biotechnology/healthcare deal to date. It would dwarf the 23andMe deal of $3.5 billion, which was considered the largest biotech SPAC back in February 2021.
As part of the deal, Jason Kelly will continue in his position as CEO, and Reshma Shetty will continue to serve as President/COO. Additionally, the CEO of Soaring Eagle, Dr. Arie Belldegrun, and the independent directors of Ginkgo will join the board of directors of the combined company. The transaction is expected to close in the third quarter of this year if the deal is approved by both boards of directors. Following the transaction, the new company will change its name to Ginkgo Bioworks Holdings, Inc.
“Eagle Equity Partners continues to focus on companies that are in a category of one,” said Harry E. Sloan, CEO of Soaring Eagle. “Ginkgo is not only a leader in this field, but its founders launched the modern practice of synthetic biology. There has never been a more critical time to employ Ginkgo’s technological achievements and efficiencies toward solving so many real-world problems—environment, food, and health, to name a few. We’ve been so impressed with Jason and his co-founders’ sense of purpose, and we believe that this team will be the ambassadors of these advances for decades to come.”
The market for bioengineered products is estimated to reach $2-$4 trillion in the next decades. With this transaction, Ginkgo becomes a powerhouse in the field.
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