Ramius’ Persistence Pays Off: Cypress Biosciences Finally Says Yes - Biotech's Latest M&A Action

Includes: ACL, CYPB, GSK, NVS, TMO
by: The Burrill Report

By Marie Daghlian

After months of wrangling, Cypress Bioscience (CYPB) finally agreed to be bought by Ramius, one of its majority shareholders. The deal was sealed after Ramius teamed up with Royalty Pharma to offer Cypress shareholders $6.50 per share in cash, valuing the transaction at $255 million. It was one of the few purchases in the traditional innovative drugs space, however, as life sciences companies around the world embarked on a $6.7 billion shopping spree during the waning days before Christmas.

Hedge fund Ramius was unhappy with the way management was running Cypress, a specialty pharmaceutical that develops drugs to treat central nervous system disorders. As a shareholder with close to a 10 percent stake in the specialty pharma, it decided to make an unsolicited offer to acquire the company for $4 per share in July, a 60 percent premium to its trading price of $2.50 before the offer. Cypress’ board rejected it quickly, refused to open its books to Ramius, and quickly began evaluating its options. A hostile takeover attempt in September at $4.25 a share was also rejected. Finally on December 9, Ramius offered to acquire the company for $5.50 a share, an offer that would be rescinded if not acted on within 24 hours. That brought Cypress to the negotiating table.

The final purchase price represents a 160 percent premium to Cypress’ unaffected share price on July 16, 2010, the last trading day before public disclosure of Ramius’ first offer.

“For more than two months, Cypress’ Board of Directors undertook a comprehensive evaluation of the Company’s strategic alternatives,” says Daniel Petree, lead independent director of Cypress’ board. “After thorough and extensive analysis with our financial advisors, Cypress’ board unanimously concluded that this transaction with Ramius and Royalty Pharma provides significant cash value to our stockholders and is in the best interests of our stockholders, customers, and employees.” The tender offer is open until December 29, 2010.

Novartis (NYSE:NVS) also sweetened its offer for the eye care company Alcon (NYSE:ACL) and finally sealed the deal for the remaining shares it did not own. The biopharma had acquired three quarters of the giant eye care company from Nestle, paying $10.5 billion in April 2008 and another $27 billion in January 2010. Minority shareholders, however, refused to tender their shares because Novartis’ offer to them was significantly less that what it agreed to pay Nestle. The new deal, which Alcon’s board has approved, values the outstanding shares at $168 per share. Payment will be made in Novartis shares, and, if necessary, a cash contingent value amount to result in a total value of $168 per share.

After the merger is complete, Alcon will become the second largest division within Novartis with Ciba Vision and select Novartis ophthalmic medicines integrated into Alcon. The combined company will have more than $8.7 billion in sales covering more than 70 percent of the eye care segment.

Fresh off its $3.8 acquisition of SSL in July, which gave it Durex condoms and Scholls footcare, U.K. consumer goods group Reckitt Benckiser announced that it will pay $726 million for India’s Paras Pharmaceuticals, according to Reuters. Private equity-backed Paras makes over-the-counter medications. In October, India’s Business Standard newspaper reported that GlaxoSmithKline (NYSE:GSK), Sanofi-Aventis (NYSE:SNY), Novartis and Johnson & Johnson (NYSE:JNJ)had all submitted concrete bids to acquire majority stake in Paras.

GlaxoSmithKline also expanded its consumer healthcare division with the purchase of Maxinutrition, Europe’s premier sports nutrition company, for $256 million in cash from its private equity owners. Maxinutrition produces Maximuscle, Maxifuel and Maxitone.

Maxinutrition’s products will complement GSK’s carbohydrates nutrition business, and allow the company to contemplate a range of innovations in the future, CEO Andrew Witty told Reuters in an interview. “You could then imagine a whole series of new products at all levels of the system--you could imagine elite sports products, you could imagine nutrition for the elderly, and you could also imagine daily nutritional supplements for people in Africa,” he told Reuters.

Thermo Fisher Scientific (NYSE:TMO) is expanding into the water-analysis business in China with the acquisition of Sunnyvale, California-based Dionex for $2.1 billion. The $118.50 per share offer price represents a premium of 21 percent over its closing value before the announcement. Dionex made the first ion-chromatography system for water analysis. The acquisition will increase Thermo Fisher’s business in China, where there is demand for measuring water quality, according to the companies.

Finally, Japan’s Otsuka Holdings completed its IPO, raising $2.4 billion, the largest initial offering on record for a pharmaceuticals firm. Otsuka is Japan’s second largest drugmaker by sales after Takeda Pharmaceutical.


Global Venture Financings
Company Location Amount Raised (USD M) Principal Focus
NovImmune Plan-Les-Ouates, Switzerland 20.6 Inflammatory therapeutics
Semprus BioSciences Cambridge, MA 18.0 Antibacterial coatings
QuantaLife Pleasanton, CA 17.2 PCR technology
Nano-Terra Cambridge, MA 17.2 Nanotechnology
Small Bone Innovations New York, NY 15.0 Medical devices
Sarasota Medical Sarasota, FL 1.1 Wound care
RQx Pharmaceuticals San Diego, CA 1.0 Antibiotics
Mobisante Redmond, WA N/A Ultrasound devices
Total Raised US 69.5
Total Raised Non-US 20.6
Grants and Contracts
Company Funding/Contracting Agency Amount Raised (USD M) Principal Focus
Trophos (France) European Union for MitoCare project 7.9 Cardiovascular
Stellar Biotechnologies (Canada) National Science Foundation 0.1 Biomanufacturing
Kane Biotech (Canada) Manitoba TCP 0.1 Microbial films
Repligen Muscular Dystrophy Association 1.4 Musculoskeletal
Affiris (Austria) Michael J. Fox Foundation 0.5 Parkinson's vaccine
Discovery Laboratories NIH Fast Track SBIR Phase I 0.6 Respiratory
Akonni Biosystems NSF Phase I 0.2 Infectious
Lonza (Switzerland) DoD-to develop PermaDerm 18.0 Dermatology
Total Grants and Contracts 28.8
Company Ticker Amount
Raised (USD M)
Financing Type
Otsuka Holdings Tokyo:4578 2,400.0 IPO
Pharming (Netherlands) Euronext:PHARM 21.4 PIPE
Evogene (Israel) TASE:EVGN 12.0 PIPE (Bayer CropScience)
WaferGen Biosystems OTC:WGBS 5.0 PIPE
YM Biosciences (Canada) YMI 40.0 Follow on
Bioniche Life Sciences (Canada) TSX:BNC 14.4 Follow on
Cadence Pharmaceuticals CADX 8.0 Exercise of overallotments
WaferGen Biosystems OTC:WGBS 2.0 Loan from Oxford Finance
International Stem Cell OTC:ISCO 25.0 CEFF
Cardica CRDC 10.0 At-the-market commitment
MedShape Solutions Private N/A In-Q-Tel strategic investment
Zealand Pharma (Denmark) CSE:ZEAL 4.0 Warrant exercise
NON-US 2,491.8
Acquirer Target Deal Value
Thermo Fisher Scientific Dionex 2,100.0 Tools/Technology
Novartis (Switzerland) Alcon (Switzerland) 1,900.0 Ophthalmic
Galderma (L'Oreal and Nestle-Europe) Q-Med (Sweden) 970.0 Aesthetics
Reckitt Benckiser (United Kingdom) Paras Pharmaceuticals (India) 726.0 OTC drugs
Samsung (South Korea) Medison (South Korea) 262.8 Medical equipment
GlaxoSmithKline (United Kingdom) Maxinitrition (United Kingdom) 255.0 Wellness
Ramius Cypress Bioscience 255.0 Specialty pharma
Prestige Brands J&J's Dramamine business 76.0 Motion sickness
H.I.G. Capital Matrixx Initiatives 75.2 OTC healthcare
Gen-Probe GTI Diagnostics 53.0 Diagnostics
Meda (Sweden) GlaxoSmithKline OTC products (United Kingdom) 34.3 Over-the-counter
Syneron Medical (Israel) Pharos Life (Israel) 15.8 Aesthetics
Bohia Pharmaceuticals (China) Shandong Daxin Microbiology Pharmaceutical Industry (China) 7.2 Traditional Chinese Medicines
Shanghai Fosun Pharmaceuticals (China) Shenyang Hongqi Pharmaceutical (China) N/A Infectious
HELM (Germany) Amarin Technologies (Argentina) N/A Drug delivery
Company/Licensee Company/Licenser Deal Value
MedImmune (AstraZeneca-United Kingdom) Develogen (Evotec-Germany) 341.3 Diabetes drug license and collaboration
GlaxoSmithKline (United Kingdom) Impax Pharmaceuticals 186.5 Parkinson's drug license
Tesaro Opko Health 121.0 Oncology drug license
Mundipharma (United Kingdom) Infinity Pharmaceuticals 110.0 Extension of cancer drug alliance
Tanabe Research Labs (Mitsubishi Tanabe Pharma-Japan) Anaphore 110.0 Autoimmune disease partnership
Paladin Labs (Canada) ProStrakan (United Kingdom) 77.8 Emerging market marketing license
GlaxoSmithKline (United Kingdom) Unigene Laboratories 8.0 Extension of licensing agreement
Amgen BioFocus (Galapagos-Belgium) 2.6 Extension of drug discovery collaboration
Ninepoint Medical Massachusetts General Hospital N/A License to 188 patents
Integrated BioBank of Luxembourg WaferGen Biosystems N/A Personalized medicine alliance
Pfizer DiaGenic (Norway) N/A Alzheimer's collaboration
Recordati (Italy) Nymox Pharmaceutical N/A Genitourinary therapeutic license
H. Lundbeck (Denmark) Vernalis (United Kingdom) N/A Drug discovery collaboration
Watson Pharmaceuticals Preglem (Gedeon Richter-Hungary) N/A Genitourinary therapeutic license
H. Lundbeck (Denmark) Zenobia Therapeutics N/A CNS therapeutics collaboration
Sanofi-Aventis (France) Merck KGaA (Germany) N/A Cancer drugs alliance
Bayer CropScience (Germany) Evogene (Israel) N/A Crop trait collaboration

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