Ligand prices upsized $625M convertible senior notes to fund Xoma Royalty deal
What's the deal? Ligand PharmaceuticalsDealroom has a profile for this one. Try Dealroom → (Nasdaq: LGND) has priced an upsized private offering of $625 million in 0.0% convertible senior notes due 2031.
The biotech firm gave initial purchasers a 13-day option to buy an additional $75 million.
Net proceeds land at about $605.3 million, rising to $678.2 million if that option is fully exercised.
Why now? Ligand will use the cash to help fund its previously announced acquisition of Xoma Royalty Corporation, along with general corporate purposes.
It earmarked $60 million to repurchase 228,859 shares at $262.17 each, and about $72.9 million for convertible note hedges to limit dilution.
The notes carry an initial conversion price of roughly $334.27 per share, a 27.5% premium to the last closing price. Related warrants set a strike price of $524.34, double that close.
What could go wrong? The notes and warrants could dilute common stock if converted or if shares climb above the warrant strike.
Ligand also faces potential cash outlays from a fundamental change repurchase at 100% of principal.
The hedging and buyback activity may move LGND share and note prices unpredictably.
The signal: Zero-coupon convertibles let cash-hungry firms raise large sums without paying interest, betting share prices stay strong — and Ligand, a mature biotech focused on royalty-based pharmaceutical assets, is using the structure to bankroll its Xoma Royalty acquisition while softening the dilution that usually comes with convertible debt. The accompanying hedges and share buyback signal a deal-making playbook more biotechs may follow.
Read more: StockTitan
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