aibioLigand Pharmaceuticals signs merger agreement to acquire XOMA Royalty for $39.00 per share in cash
Tickers LGND
Ligand will pay about $739 million in equity value for XOMA Royalty, plus a contingent value right tied to litigation. The deal needs a XOMA Royalty stockholder vote and is expected to close in the third quarter of 2026.
Key facts
- Company
- Ligand Pharmaceuticals Incorporated (NASDAQ: LGND)
- News type
- Mergers
- Primary source
- LIGAND PHARMACEUTICALS INC Form 8-K filed April 27, 2026 (SEC EDGAR)
Ligand Pharmaceuticals Incorporated (Nasdaq: LGND) agreed on April 27, 2026 to acquire XOMA Royalty Corporation (Nasdaq: XOMA) under a merger agreement that pays XOMA Royalty stockholders $39.00 per share in cash. The companies put the total equity value at about $739 million. Ligand described the terms in a Form 8-K filed April 27, 2026 under Item 1.01.
The terms
Ligand, XOMA Royalty and Flex Merger Sub, Inc., a Ligand subsidiary, signed the Agreement and Plan of Merger. Before the merger closes, XOMA Royalty will complete a holding company reorganization, and the merger will be into the new holding company. Each XOMA Royalty common share will convert into $39.00 in cash plus one contingent value right, or CVR. The CVR is non-transferable. It pays a portion of 75% of the net proceeds, if any, from the Janssen Litigation, which is XOMA Royalty's dispute with Janssen Biotech over the commercialization of TREMFYA.
The cash price is about 14% above XOMA Royalty's 30 trading day volume weighted average price as of April 24, 2026, the last trading day before the announcement. Ligand's obligations are not subject to any financing condition. The press release says the cash will come from Ligand's existing cash on hand and borrowings under its existing credit facility.
XOMA Royalty's Series X Convertible Preferred Stock converts into the merger consideration. Its 8.625% Series A and 8.375% Series B Cumulative Perpetual Preferred Stock will be redeemed, including accrued and unpaid dividends.
Support, conditions and protections
Ligand signed Voting and Support Agreements with certain XOMA Royalty officers, directors and funds affiliated with BVF Partners. The 8-K says those holders beneficially owned about 47% of the outstanding shares as of April 27, 2026. The press release says BVF-affiliated entities own about 21% of XOMA Royalty's common stock and about 44% counting the Series X preferred on an as-converted basis.
Closing requires approval by a majority of XOMA Royalty's voting power, expiry of the Hart-Scott-Rodino waiting period, and completion of the holding company reorganization and a spin of the CVR arrangement. The companies expect the deal to close in the third quarter of 2026.
XOMA Royalty agreed to limits on soliciting rival offers, but its board may engage with an unsolicited proposal it believes in good faith could lead to a superior one. XOMA Royalty owes a $40,000,000 termination fee in specified cases, including if it ends the agreement to accept a superior proposal. Either side may terminate if the merger has not occurred by January 26, 2027.
Who advised
Stifel is lead financial adviser to Ligand, Citi is a financial adviser, and Paul Hastings LLP is legal adviser. Leerink Partners is lead financial adviser to XOMA Royalty, H.C. Wainwright & Co. is a financial adviser, and Gibson, Dunn & Crutcher LLP is its legal adviser.
Ligand's own numbers
Ligand's annual report for 2025, filed February 27, 2026, reports net income of $124.5 million for 2025, compared with a net loss of $4.0 million for 2024. Cash provided by operations fell to $49.4 million in 2025 from $97.0 million in 2024. The report says Ligand has a revolving credit facility under a credit agreement dated October 12, 2023, and that the agreement contains financial maintenance covenants. It also lists $460.0 million of 0.75% convertible senior notes due 2030.
Ligand says the deal adds seven marketed products and expands its royalty portfolio to more than 200 assets. It raised its 2026 revenue guidance to $270 million to $310 million, from $245 million to $285 million, and its adjusted earnings per diluted share guidance to $8.50 to $9.50. It also expects the deal to add $1.50 per share to adjusted earnings per share in 2027. These are the company's own forecasts, and the filings do not show the XOMA Royalty figures behind them.
What the deal leaves open
XOMA Royalty holders get cash now, but the CVR depends on a court outcome and may pay nothing. Ligand pays for the deal from a balance sheet whose operating cash flow fell in 2025. The 8-K does not give the amount to be drawn on the credit facility, or say how the $460.0 million of 2030 notes figure in the funding. The company's guidance assumes the deal closes and performs as described.