Genzyme: Minimizing dilution

Back-to-School Issue: The M&A game

Lesson: M&A can be used with an eye to replenishing the top line in the future. The trick is to build for the out years while protecting current EPS.

Genzyme’s acquisition of GelTex, as well as its recently announced plan to purchase SangStat Medical Corp., illustrate how the company has managed to do acquisitions with a long-term payoff horizon without much immediate dilution.

In many ways, GENZ’s 2000 acquisition of GelTex for $1 billion in cash and stock was easy to do: the two companies already had a joint venture for GelTex’s lead product. The deal also was only mildly dilutive in year one, even though it was taken with a long term view: sales of Renagel, a phosphate binder for end-stage renal disease, weren’t expected

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