Shares of Cypress Bioscience rallied Monday on word that investor manager Ramius, which has had some problems with the way the biotech has been run, had offered to buy all outstanding shares of the company it doesn't already own for $4.00 per share in cash. Ramius currently owns 9.9 percent of the outstanding common stock of Cypress, making it one of the company's largest shareholders.
In a letter, Ramius expresses displeasure at the Cypress' "ill-conceived acquisitions," highlighting its acquisition of Proprius--something Ramius has dubbed "a complete failure." It adds that the Cypress board "has shown a complete disregard for the best interests of all shareholders and its fiduciary duty to maximize shareholder value," the letter states. "We implore the Board to cease and desist from approving any further acquisitions and not enter into, or seek or propose to enter into, any further material transactions, licensing agreements or business combinations that could jeopardize the ability for shareholders to realize full and fair value for their investment."
The letter further slams the Cypress board by pointing out that the company has "materially underperformed both the Russell 2000 Index and Nasdaq Biotech Index" over the past one, three and five years.
"The Cypress Board needs to realize that a management team that continues to destroy shareholder value by making increasingly risky investments with shareholder money is not a management team to follow blindly. The correct conclusion at this juncture is to stop, hire a reputable banker, and maximize value for all shareholders," Ramius Partner Managing Director Jeffrey Smith says in a statement.
Shares of Cypress Bioscience jumped by $1.03, or 41.2 percent, to $3.53 in the premarket session, TheStreet notes.