Cypress Bioscience has rejected a $154 million buyout proposal floated by investor manager Ramius last month. "After carefully and thoroughly reviewing the contents of your proposal and with the assistance of financial and legal advisors, we have unanimously concluded that your proposal is not in the best interests of the other Cypress stockholders," the biotech says in a letter.
Ramius owns a 9.9 percent stake in Cypress and has expressed displeasure at the company's "ill-conceived acquisitions," highlighting its acquisition of Proprius--something Ramius has dubbed "a complete failure."
Cypress also confirmed receiving a letter from Jeffrey Smith, partner managing director at Ramius. The company takes issue with Smith making "several unsupported assertions regarding the decision by Cypress to discontinue the co-promotion of Savella with Forest Laboratories." Earlier this week, Cypress Bioscience announced that it is opting out of its right to co-promote the fibromyalgia drug and has decided to eliminate 123 workers--86 percent of its employees--in a restructuring aimed at drastically reducing its costs.
Smith blasted Cypress' actions, and urged the company to "halt all extraordinary transactions until the Company has time to fully explore maximizing value for shareholders," according to his Aug. 5 letter. "Unfortunately, this transaction once again shows the questionable business judgment within the boardroom to do a hasty and ill-conceived deal without determining the best overall course of action for shareholders," Smith adds.
In response, Cypress assured Smith the company is "keenly aware" of its duties to stockholders and any assertion to the contrary "is completely without merit."
- read the Cypress release
- check out Smith's letter
- get the Reuters report