Pharmacopeia Drug Discovery, Inc. (PCOP)

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Ligand to buy Pharmacopeia for $70 million
Wednesday September 24, 6:23 pm ET
Ligand to buy Pharmacopeia for $70 million in stock-for-stock deal with contingent payment

SAN DIEGO (AP) -- Ligand Pharmaceuticals Inc. said Wednesday it will buy biotechnology company Pharmacopeia for about $70 million in a move to expand drug discovery resources and the product pipeline.

The transaction is structured as a stock-for-stock exchange. In addition, Pharmacopeia stockholders will be entitled to a contingent value right, Ligand said. That will entitle holders under certain circumstances to a cash payment of about $15 million for all Pharmacopeia stockholders.

Under the deal, Ligand will issue about 17.5 million shares, or 0.58 shares for each outstanding share of Pharmacopeia. Current Ligand shareholders would own 84 percent of the combined company.

Based on Ligand's closing price of $3.12 Wednesday, the deal implies a price of $1.81 per share for Pharmacopeia, making it a 52 percent premium. That totals about $55 million, with an additional $15 million potentially for the contingent value right.

The deal is expected to close in the first quarter of 2009.

Shares of Ligand rose 2 cents to close at $3.12 while shares of Cranbury, N.J.-based Pharmacopeia fell 6 cents, or 4.8 percent, to close at $1.19. It has traded in a 52-week range of $1 to $6.10.