Shares of Cypress Bioscience Inc. (CYPB) jumped 45 percent to $3.53 in premarket trading Monday, the most intraday since May 2007, on news that hedge fund Ramius LLC, one of Cypress’ largest investors, would bid $154 million for the small-cap biotech firm.
Ramius, which already owns nearly 10 percent of Cypress, announced that it has sent a letter to the Board of Directors of Cypress Bioscience, outlining an offer to acquire all of the outstanding shares of the co. that it does not already own for $4.00 per share in cash. The offer represents an almost 60% premium over Cypress’ closing price of $2.50 on July 16.
Ramius said in its letter that it expects Cypress management to hire an investment bank to evaluate its offer.
“We are ready, willing, and able to close this transaction expeditiously and expect the Board of Directors (the “Board”) to retain a reputable investment bank to immediately engage in discussions with us and any other potential acquirers to maximize value for all shareholders”. The hedge fund also noted in its letter that it would be willing to consider a deal structure that would allow the biotech firm to continue developing its drug candidate BL-1020, a potential breakthrough treatment for schizophrenia, if they can fund it themselves or arrange for third-party financing.
According to Tripp Levy the investigation concerns, among other things, “whether the consideration to be paid to Cypress shareholders is grossly unfair, inadequate, and substantially below the fair or inherent value of Cypress. Indeed, analysts have recently projected that Cypress’ true inherent value is worth as much as $10 per share.”
Cypress shares gained 87 cents, or 34.80%, to $3.37 at 11:35 ET in Nasdaq trading. CYPB traded to $9.95 last year at this time.