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Genzyme Corp A Financing History Case Solution

Solution Id Length Case Author Case Publisher
727 331 Words (1 Pages) Timothy A. Luehrman, Andrew D. Regan Harvard Business School : 294005
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Genzyme Corporation issued shares in a seasoned offering twice, in December 1989 and April 1991, which netted $170.6 million. This was, as promised by Mr. Termeer, for the use of developing infrastructure and not R&D. As a company that relied heavily on R&D, it was difficult for Mr. Termeer to keep his promise. Investors would definitely not be interested if all the funds go into research of a technology that may take years to develop, license and then come into the market. Soon, Genzyme Corporation was looking for more sources of finance.

Genzyme Corp A Financing History Case Analysis

Genzyme purchased Integrated Genetics, Inc. and quickly sold all its assets, other than research and manufacturing operations, for a net inflow of about $9.5 million. In 1990, the IG Labs so acquired then had an IPO that raised another $14.7 million and soon IG set out to acquire other technology firms. With this, Genzyme’s research-based projects were becoming more secure as it was entering into broader markets of paternity testing, bone marrow typing and identity and forensic testing. As Mr. Termeer portrayed Genzyme to its investors as a business and not just a technology, further sources of finance had to be established.

In 1990, Genzyme formed Neozyme Corporation and hoped to raise money. A solid move was to attach options and warrants to these offerings to give some security to the investors. A $23 unit of Neozyme consisted of a callable common stock share and a warrant to purchase Genzyme common stock for $19; the Genzyme stock was trading at $19 prior to the offering.

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