August 6th 2020
Genealogy Database Ancestry.com is selling 75% of itself to Blackstone Group for $4.7 Billion in deal that will give the asset manager access to DNA data of up to 18 Million members
Genealogy and DNA-testing giant Ancestry.com announced Wednesday it is selling 75 percent of the company to asset manager Blackstone Group Inc. The investment firm said in a statement it agreed to acquire the genealogy provider from private equity rivals for $4.7 billion, including debt, placing a big bet on family-tree chasing as well as personalized medicine. Utah-based Ancestry.com has more than three million paying customers and data on over 18million people in its DNA network.
The deal with Blackstone has left some of the family history service's users unnerved at the transfer of data on their DNA to the control of another company. Ancestry.com is the world's largest provider of DNA services, allowing customers to trace their genealogy and identify genetic health risks with tests sent to their home. Blackstone is hoping that more consumers staying at home amid the COVID-19 pandemic will turn to Ancestry.com for its services.
'We are very excited to partner with Ancestry and its management team. We believe Ancestry has significant runway for further growth as people of all ages and backgrounds become increasingly interested in learning more about their family histories and themselves,' David Kestnbaum, a Blackstone senior managing director, said in a statement.
Blackstone's Continued Focus'We look forward to investing behind further data, functionality, and product development across Ancestry's market leading platform to continue to provide a differentiated service. 'Our investment is a prime example of Blackstone's continued, high-conviction focus on investing in growing, digital consumer businesses, which are resilient in the current environment and beyond.'
'Ancestry's large network of highly engaged users, unique content, and scaled technology platform have made it a market leader,' added Sachin Bavishi, a Managing Director at Blackstone. 'We look forward to contributing Blackstone's resources and leveraging our strong expertise in digital content to further accelerate Ancestry's growth.' Ancestry.com has more than three million paying customers in about 30 countries, and earns more than $1 billion in annual revenue.
Launched in 1996 as a family history website, it harnessed advances in DNA testing and mobile phone apps in the following two decades to expand its offerings. Initially offering genealogy services through data trails only, it began to offer DNA-based genealogy tracking in recent years to better compete with main rival 23andMe. It has also branched out to genomics, this month launching a screening service designed to test individuals' risk of developing inheritable health conditions such as heart disease, breast cancer and colon cancer, according to the Financial Times.
The Price TagBlackstone is buying Ancestry.com from private equity firms Silver Lake, Spectrum Equity and Permira.Singapore's sovereign wealth fund GIC, another Ancestry.com investor, said it will continue to maintain a significant minority stake in the company. The acquisition's price tag represents a significant jump to Ancestry.com's valuation from four years ago, when Silver Lake and GIC invested in the Lehi-based company at a $2.6 billion valuation.
While it could leave Ancestry's members wary, the deal is a big win for the company's owners.According to Fast Company, Ancestry.com first went public a decade ago when it was valued at only $100 million. It went private again in 2012 for $1.6 billion. Wednesday's deal for just 75 percent of Ancestry.com is almost three times the 2012 valuation for the entire company.
The FT reports, however, that it had a 'very high debt burden' of 6.7 times debt-to-ebitda as of December 2019. Yet its steady cash flows from its website subscribers could service this. According to Moody's, Ancestry's total revenue fell 1.2 per cent in 2019 as sales in its DNA unit dropped 48 per cent.
As a result, Margo Georgiadis, Ancestry's chief executive and president, announced the company would lay off six per cent of its workforce in April. The deal is Blackstone's first acquisition out of Blackstone Capital Partners VIII, the largest-ever private equity fund that raised $26 billion from investors last year.