By Lisa Kerner
Charlotte, N.C., Sept. 24 - Ligand Pharmaceuticals Inc. announced it agreed to acquire Pharmacopeia Inc. in a stock-for-stock deal valued at up to $70 million, or approximately $1.81 per share.
According to Ligand, it will issue approximately 17.5 million shares, or 0.58 shares for each outstanding Pharmacopeia share, giving Ligand stockholders ownership of approximately 84% of the combined company.
The companies' merger agreement includes contingent value rights for an additional cash payment of $15 million, or $0.50 per Pharmacopeia share, if Ligand enters into a license, sale, development, marketing or option agreement with respect to its DARA program by Dec. 31, 2011.
A Ligand news release said the transaction includes a collar that provides for a fixed exchange ratio within a price range of $3.00 to $3.75 for Ligand stock. In addition:
• At prices between $3.75 and $4.50, the value is fixed at $66 million;
• At prices above $4.50, the exchange ratio is fixed at 0.49;
• At prices below $3.00, the value is fixed at $52.8 million, including some cash contribution at prices below $2.93 and above $2.38;
• Below $2.38, the consideration is fixed at 0.60 shares and $10 million in cash in total; and
• At prices equal to or less than $1.65, Pharmacopeia has the right to terminate the agreement.
A $3.38 million termination fee is included in the agreement, it was reported in a form 8-K filed with the Securities and Exchange Commission.
The companies expect to close the transaction by the first quarter of 2009, subject to shareholder approval, regulatory clearance and other customary closing conditions.
"Pharmacopeia's shareholders will receive a substantial amount of equity in a well-capitalized company with lucrative potential royalties, an expanded pipeline and financial liquidity," Ligand president and chief executive officer John L. Higgins said in the release.
"The acquisition of Pharmacopeia will complement and accelerate our product development programs, strengthen our research capability and increase our potential royalty streams," Higgins added.
Ligand, a San Diego drug development company, was advised by Goldman Sachs.
Pharmacopeia, a Princeton, N.J., biopharmaceutical company, was advised by Cowen & Co.
| Acquirer: | Ligand Pharmaceuticals Inc.
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| Target: | Pharmacopeia Inc.
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| Announcement date: | Sept. 24
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| Price per share: | 0.58 shares of Ligand
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| Transaction total: | Up to $70 million
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| Termination fee: | $3.38 million
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| Expected closing: | First quarter of 2009
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| Stock price of acquirer: | Nasdaq: LGND: $3.10 on Sept. 23
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| Stock price of target: | Nasdaq: PCOP: $1.25 on Sept. 23
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