23andMe Board Resigns, Leaving 23andMe in Limbo
The 23andMe board resigns in a dramatic turn of events, leaving CEO Anne Wojcicki as the sole board member and the company facing a precarious future. This mass resignation comes amidst Wojcicki’s persistent efforts to take the company private, a move that has been met with resistance from the independent board members. This comes shortly after the giant agreed to pay $30 million settlement for a data breach.
The Root of the Conflict: A Clash of Visions
The board’s letter to Wojcicki, released on Tuesday, September 19, 2024, stated that its members preferred resigning rather than continuing to disagree with the company’s direction. This resignation leaves 23andMe in a precarious position, facing a looming deadline to regain compliance with Nasdaq listing rules.
The company’s struggle to determine its future has been marked by a growing rift between Wojcicki and the independent board members. Wojcicki, who co-founded the company, has been vocal about her desire to take 23andMe private, aiming to maintain control and steer the company away from the “short-term pressures of the public markets.” However, she has yet to submit a fully financed proposal to achieve this.
A Rejected Offer and a Looming Deadline
The board, tasked with maximizing shareholder value, formed a special committee to review strategic alternatives for the company, including Wojcicki’s proposed acquisition. In July, Wojcicki offered 40 cents per share for the shares she doesn’t already own, a proposal that was met with rejection by the board. The board deemed the offer “insufficient and not in the best interest of non-affiliated shareholders,” citing its lack of a premium and committed financing.
The board’s rejection prompted Wojcicki to attempt to secure financing and resubmit a revised proposal. However, the board’s patience wore thin, as the company faced a looming deadline to regain compliance with Nasdaq listing rules.
Facing Delisting and Regulatory Challenges
The Nasdaq, in November 2023, issued a notice to 23andMe regarding its deficient stock price, which had fallen below the $1 per share threshold. The company was granted an 180-day extension to regain compliance, which expired in May 2024. The Nasdaq granted another extension until November 4, 2024.
The board’s resignation triggered another delisting notice from the Nasdaq, this time for different rules violations. The Nasdaq requires a majority of a company’s board to be comprised of independent directors, a requirement now violated by 23andMe. The company also faces violations related to its audit and compensation committees, both of which must be comprised of independent directors.
23andMe has been given until October 3, 2024, to submit a plan to regain compliance with these rules. If the plan is accepted, the company may be granted up to 180 days to provide evidence of compliance.
An Uncertain Future for 23andMe
In the meantime, 23andMe’s stock continues to trade on the Nasdaq, with its closing price on Wednesday, September 18, 2024, at 34 cents.
The board’s resignation and the looming delisting threat highlight the challenges facing 23andMe. The company’s future remains uncertain, with the outcome hinging on Wojcicki’s ability to secure financing for her proposed takeover and navigate the complex regulatory landscape.
The 23andMe board resigns, leaving the company in a precarious position as Wojcicki attempts to take it private. This move highlights the ongoing struggle for control of the genetic testing giant and its uncertain future.
