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Tempus AI, Inc. has finalized a definitive merger agreement to acquire Personalis, Inc., a genomics company headquartered in Delaware, through a combined stock and cash transaction. Announced on July 20, 2026, the deal offers Personalis shareholders the option to receive either Tempus Class A common stock or $16.25 per share in cash, with the exchange ratio dependent on Tempus's stock price at closing. Approved by both companies’ boards, the transaction is structured to qualify as a tax-free reorganization under Section 368(a) of the Internal Revenue Code.
Key Points
- NASDAQ: TEM
- Tempus AI to acquire Personalis in an all-stock and cash merger
- Personalis shareholders to receive Tempus Class A common stock or $16.25 cash per share; Tempus may pay up to 50% in cash
- Exchange ratio fixed at 0.3356 shares if Tempus stock trades at or below $48.42; otherwise calculated as $16.25 divided by Tempus stock price
- Transaction approved by both boards; Personalis board recommends stockholder approval
Merger Structure and Execution
The acquisition will proceed via a two-step merger. Initially, Tempus’s wholly-owned subsidiary Aviary Development, Inc. will merge into Personalis, which will then become a wholly-owned Tempus subsidiary. Subsequently, Personalis will merge into Tempus’s second subsidiary, Toucan Development, LLC, with Toucan surviving as the subsidiary holding the acquired operations. This structure is designed to maintain the desired tax treatment as a reorganization under federal law.
Both Tempus and Personalis boards have approved the merger agreement and related transactions, with Personalis’s board recommending shareholder adoption, subject to terms and conditions.
Merger Consideration Details: Stock, Cash, and Exchange Ratio
Personalis common stockholders will receive a combination of Tempus Class A common stock, cash, fractional share adjustments, and any post-closing distributions. Shares owned by Personalis, Tempus, or their subsidiaries, as well as shares subject to valid appraisal rights, are excluded from consideration.
Tempus may elect to pay cash for up to 50% of outstanding Personalis shares, potentially reduced automatically to preserve tax treatment. Under this election, shareholders receive $16.25 per share in cash for the elected portion and Tempus stock for the remainder. The stock exchange ratio is determined based on the volume-weighted average price of Tempus shares over the 15 trading days before closing.
Exchange Ratio and Pricing Mechanism
The exchange ratio includes a floor price safeguard. If Tempus’s stock price averages at or below $48.42 over the specified period, the ratio is fixed at 0.3356 shares per Personalis share. If above this floor, the ratio is calculated as $16.25 divided by the Tempus stock price, allowing adjustment based on Tempus’s valuation at closing.
In case of a "Tempus Transaction" before closing, the stock price used for the ratio will be based on the per-share consideration in that transaction instead of market prices. Shares issued as stock consideration will be listed on Nasdaq post-transaction.
Handling of Personalis Employee and Director Equity Awards
The merger agreement outlines specific treatment for Personalis equity awards. In-the-money options held by former employees, non-employee directors, and vested current service providers will be cancelled and converted into stock consideration rights. Other in-the-money options will be assumed by Tempus and converted into options to purchase Tempus Class A common stock, adjusted by the exchange ratio and exercise price.
Out-of-the-money options will be cancelled without compensation. Restricted stock units (RSUs) held by non-employee directors will vest fully before closing and then be exchanged for stock consideration. Other RSUs will be assumed and converted into Tempus RSUs, adjusted by the exchange ratio, ensuring vested awards receive immediate consideration while unvested awards convert into equivalent Tempus instruments.
Acceleration and Vesting of Performance Share Units
Personalis performance share units (PSUs) will vest on an accelerated basis proportional to the elapsed time in the measurement period through closing. The vested portion will be cancelled in exchange for stock consideration. Any remaining unvested PSUs will continue under original terms as Tempus PSUs, preserving incentives for the remainder of the performance period.
Fractional Shares and Post-Closing Distributions
Cash will be paid in lieu of any fractional shares resulting from the exchange ratio. The agreement also allows for potential post-closing distributions to Personalis shareholders, though specifics are not detailed in the filing. These provisions facilitate smooth conversion of Personalis equity into Tempus equivalents and resolve fractional interests with cash.
Regulatory Approvals and Tax Treatment
Both boards have approved the merger agreement and recommend stockholder approval at Personalis. The transaction is intended to qualify as a tax-free reorganization under Section 368(a) of the Internal Revenue Code, offering favorable tax treatment. However, no detailed tax opinion is provided, and shareholders should consult their tax advisors regarding individual tax implications.
Cancelled Shares and Appraisal Rights
Shares owned or held in treasury by Personalis, Tempus, or their subsidiaries will be cancelled without consideration. The agreement provides for Delaware appraisal rights, allowing shareholders who properly exercise these rights to seek judicial determination of fair value for their shares, which will be excluded from merger consideration.
Nasdaq Listing and Share Outstanding Considerations
Tempus Class A common stock issued as merger consideration will be listed on Nasdaq under the ticker TEM, ensuring liquidity and tradability for Personalis shareholders receiving stock. The filing does not disclose the total Personalis shares outstanding before closing, but the exchange ratio and cash election are structured to provide certainty of per-share value despite stock price fluctuations.
