By Michael Fitzhugh
Cypress Bioscience (CYPB) will consider putting itself up for sale or unloading part of its assets in an attempt to nullify or better a pending buyout offer made by a New York hedge fund. Ramius, a Cowen Group fund that owns 10 percent of Cypress, is offering $148 million for the shares it does not own. At $4.25 per share, Cypress’ management says the bid “grossly undervalues” its current business and future prospects.
The fund says Cypress has so far refused to negotiate with its representatives directly, despite the fact that it has expressed a willingness to potentially sweeten its bid. Ramius raised its offer once already, from $4 per share to $4.25 per share.
The spat, ostensibly over whether Cypress is making the best use of its assets, has played out in competing press statements, letters, and regulatory filings. It has also led Cypress’ board to adopt a poison pill. The temporary stockholders rights agreement is intended to “maintain the status quo while we are pursuing strategic alternatives,” says Daniel Petree, Cypress’ lead independent director.
“The Cypress board unanimously determined that the Ramius offer grossly undervalues Cypress' current business and future prospects, is highly conditional rendering it illusory and is not in the best interests of Cypress stockholders, other than Ramius and its affiliates,” says Petree.
In its most recent letter, dated September 30, Ramius managing director, Jeffrey Smith, calls Cypress' commitment to finding the best option for its shareholders “extremely vague.”
The fund’s tender offer for Cypress’ shares stands open through midnight, October 13, unless Ramius chooses to extend that deadline.