Ginkgo Bioworks buys Zymergen for $300 million

The Boston company plans to integrate the California firm’s software into its cell programming technology.

A view of the automated "foundry" inside Ginkgo Bioworks' headquarters in Boston's Seaport District.Jessica Rinaldi/Globe Staff

Ginkgo Bioworks cofounders Jason Kelly and Reshma Shetty ranked No. 5 on the 2022 Tech Power Players 50. See the full list here.

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Boston-based Ginkgo Bioworks has agreed to buy Zymergen, a biotech firm whose value plunged four months after going public, in an all-stock deal, the companies said Monday.

The transaction values Zymergen at $300 million, a bargain given that the California company was valued at $3 billion in April 2021 when it raised half a billion dollars in an initial public offering.

A few months later, Zymergen disclosed a major setback that delayed its timeline for generating revenue. Zymergen’s stock price dropped by 75 percent and its chief executive stepped down.

Now Ginkgo, which went public a few months later in a larger deal, is scooping up its competitor’s technology. Despite the discount, it’s still the company’s largest acquisition to date.

Jason Kelly, cofounder and chief executive of Ginkgo, said the Zymergen deal is not expected to generate any meaningful revenue. But he hopes the integration of its automation and software technologies will ensure Gingko’s cell programming technology keeps improving — a factor that could bring costs down over time and encourage other companies to use it.

“We would have had to build something like it, anyway,” Kelly said during a call with investors, referencing Zymergen’s tech. “By bringing this in, it sort of both speeds it up and makes it more sure that we developed that technology correctly.”

Ginkgo performs cell engineering for other companies, with the hopes that they will commercialize products with its know-how. Ginkgo works across various industries, including agriculture, pharmaceuticals, and cosmetics. Since going public, the company’s stock price has plunged more than 77 percent.

Shares of Ginkgo were down about 5 percent, at $2.78, when markets closed Monday, and Zymergen shares were up 16 percent, at $2.32.

Though Ginkgo and Zymergen both operate in the synthetic biology space, Zymergen aimed to sell its own products. As Zymergen unwinds, it is looking for “strategic alternatives” for its advanced materials and drug discovery businesses. Ginkgo said it plans to spin them off if they are not sold before the deal closes, since it doesn’t plan to bring products to market.

The deal is expected to close by the first quarter of 2023.

Ginkgo, which has about 800 employees, said members of Zymergen’s “core technical team” are expected to help fill “significant planned hiring” goals, but it declined to share any numbers. Zymergen, which employed over 500 people as of December, is reducing its headcount through layoffs, including one that will affect 80 people.