The board of Cypress Bioscience has unanimously rejected the unsolicited tender offer by Ramius V&O Acquisition LLC to purchase all of the outstanding shares of the company for $4.25 per share in cash. The company also announced it will "engage in a broad evaluation of Cypress' strategic alternatives" to "maximize value for all Cypress stockholders." Such options, Dow Jones notes, could include selling assets or the entire company.
In explaining why it rejected Ramius--again--the board said the hedge-fund operator's offer "grossly undervalues Cypress' current business and future prospects." Furthermore, it views the offer as an attempt by Ramius to obtain "an extremely attractive return on its recent investment in the Company at the expense of all other Cypress stockholders." Ramius has been wooing Cypress since July--but has been rebuffed in its efforts. Ramius currently owns 9.9 percent of the outstanding common stock of Cypress, making it one of the company's largest shareholders. It initially offered to buy Cypress for $4.00 per share in cash.
"Our Board continues to believe that the Company's current strategy of developing a portfolio of CNS drug candidates will deliver significant value to Cypress stockholders," says Daniel Petree, lead independent director of the board of directors, in a statement. But Jeffrey Smith, partner managing director at Ramius, might disagree with this sentiment. In an Aug. 5 letter, he blasted the board after Cypress announced that it was opting out of its right to co-promote Savella, a fibromyalgia drug, and eliminating 123 workers in a restructuring aimed at drastically reducing its costs. Smith also urged the company to "halt all extraordinary transactions until the Company has time to fully explore maximizing value for shareholders."
Cypress' shares were up 7.9 percent at $3.96 in recent premarket trading, compared with the $4.25 offer price that values Cypress at $163 million, Dow Jones reports. Despite gains since Ramius first made its offer, the stock is down 36 percent this year.
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