Ligand plans $550M convertible notes offering due 2031

Ligand Pharmaceuticals Incorporated (Nasdaq: LGND) announced plans to offer $550 million in aggregate principal amount of convertible senior notes due 2031 in a private placement to qualified institutional buyers under Rule 144A.

The company also expects to grant initial purchasers a 13-day option to buy up to an additional $82.5 million in aggregate principal amount of notes. The notes will mature on September 15, 2031, and will pay interest semiannually beginning March 15, 2027. The interest rate, initial conversion rate, and other terms will be set at pricing.

Ligand said it plans to use a portion of the proceeds to fund convertible note hedge transactions, which are intended to reduce potential dilution to common stockholders upon conversion. The company also expects to sell warrants to option counterparties, partially offsetting the cost of the hedge transactions. The warrant transactions could separately have a dilutive effect if the market price of the common stock exceeds the strike price of the warrants.

Up to $75 million of the net proceeds will be used to repurchase shares of Ligand common stock from certain note purchasers in privately negotiated transactions at a price equal to the last reported share price on the pricing date.

Remaining net proceeds are intended for general corporate purposes, including potential investments in complementary businesses, products, and technologies. Ligand noted it has no present commitments beyond its previously announced agreement to acquire Xoma Royalty Corporation.

The notes and warrants are being offered only to qualified institutional buyers and have not been registered under the Securities Act of 1933 or any other jurisdiction's securities laws. This announcement is based on a press release from Ligand Pharmaceuticals and does not constitute an offer to sell or a solicitation to buy any securities.

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