Ginkgo acquires Zymergen for $300M and picks up Bayer facility for $83M

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U.S. cell programming company Ginkgo Bioworks has signed definitive agreements to acquire two teams and technologies.

The deals are with Bayer and Zymergen. 

Bayer transaction

The company confirmed the previously announced transaction with Bayer to expand Ginkgo’s platform capabilities in agricultural biologicals.  Ginkgo will acquire Bayer’s 175,000-square-foot West Sacramento Biologics Research & Development site, team, and internal discovery and lead optimization platform for approximately $83 million in consideration. 

The proposed transaction is projected to close in the fourth quarter of 2022, subject to regulatory approvals and customary closing conditions. Ginkgo will also integrate the R&D platform assets from Joyn Bio, a joint-venture between Ginkgo and Leaps by Bayer formed in 2017.

Bayer will be the first major partner of Ginkgo’s expanded agricultural biologicals platform, entering into a new collaboration focused on the advancement of Joyn’s nitrogen fixation program, as well as new programs in areas such as crop protection and carbon sequestration. 

As part of a three-year strategic partnership, Ginkgo will provide research services to Bayer in the field of agricultural biologicals with the potential to earn downstream value in the form of royalties on net sales from products developed under the partnership.  

As previously disclosed, it is expected the cash proceeds from the collaboration with Bayer will offset the operating expenses acquired through the transaction.  In addition to the deal with Bayer, Ginkgo expects to engage with other customers in supporting the development of their agricultural biological programs.

Biological solutions

“To ensure sustainable food security for an ever growing population, we need to invest in biological solutions,” said Jason Kelly, CEO and co-founder of Ginkgo Bioworks. 

“By acquiring one of the premier R&D sites for agricultural biologicals worldwide and partnering with the best-in-class teams at Bayer and Joyn, we are demonstrating our commitment to developing breakthrough products for growers around the world. We are excited to be able to make this platform accessible to innovative companies and teams who may otherwise not have the resources or expertise to develop these capabilities in house.”

“Through this strategic research partnership with Ginkgo and by tapping into the open innovation ecosystem, Bayer is accelerating innovation in our biologicals pipeline and continuing to lead in the development of effective and reliable solutions,” said Bob Reiter, head of R&D for Bayer’s Crop Science division. 

“Agricultural biologicals have the potential to boost crop yields while simultaneously offering environmental benefits to growers, and Ginkgo’s technologies will help to deliver on biologicals’ potential.”

Zymergen transaction

Ginkgo also announced the acquisition of Zymergen in an all-stock transaction that values Zymergen at an approximately $300 million market capitalization. 

Under the terms of the agreement, which have been approved by the boards of directors of both companies, Zymergen stockholders will receive a fixed exchange ratio of 0.9179 Ginkgo shares for each Zymergen share, representing 5.25% pro forma ownership of Ginkgo following the transaction.

Ginkgo plans to integrate Zymergen’s core automation and software technologies for scaling strain engineering capacity into its Foundry, including Zymergen’s machine learning and data science tools for exploring known and unknown genetic design space. Ginkgo customers will also benefit from the expansion of Ginkgo’s library of biological assets following the transaction.

The agreement is Ginkgo’s largest acquisition to date and is expected to enhance Ginkgo’s platform by integrating automation and software capabilities as well as experience across diverse biological engineering approaches. 

Ginkgo is a horizontal platform, serving customers across industries rather than producing its own products, and will support Zymergen’s plans to evaluate strategic alternatives for their Advanced Materials and Drug Discovery businesses, which have established product pipelines and prototyping capabilities. 

Cell programming

Additionally, Zymergen will continue its standalone cost restructuring initiatives, including headcount reductions and program rationalization. The addition of Zymergen personnel is expected to help fill planned hiring by Ginkgo as it scales the platform. Taken together, Ginkgo expects these actions to minimize incremental run-rate operating expenses in connection with the combination once integration is completed.

“We have always had incredible respect for the Zymergen team and the strength of the technologies that they have built for cell programming,” Kelly said.

“We are thrilled to integrate Zymergen’s capabilities into our Foundry, which we expect to accelerate the growth of our platform as we continue to deliver on our mission to make biology easier to engineer for our customers, helping us drive down the costs of cell programming as we invest in scale. We can’t wait to welcome Zymergen’s technical teams, who will support our scaling objectives.”

Q1 2023 expected completion

“At Zymergen, our team has built a world class and innovative technology platform which will complement Ginkgo’s cell programming capabilities,” said Jay Flatley, chairman and acting CEO of Zymergen. 

“We’re excited about the opportunities created by combining our technologies to accelerate Ginkgo’s platform development to better serve customers, promote Zymergen’s public benefit purpose, and achieve our shared vision of sustainability and a world built on biology. The transaction also represents a compelling opportunity for our stockholders to participate in the future growth and upside potential of the combined company.”

The transaction is expected to be completed by the first quarter of 2023, subject to approval by Zymergen’s stockholders, receipt of regulatory approvals, and satisfaction or waiver of other closing conditions.

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