UPDATE 4-Ramius offers to buy Cypress Bioscience for $154 mln

* $4/shr offer at 60 pct premium to stock’s Friday close

* Ramius asks board to not make further acquisitions

* Ramius expects co to immediately evaluate offer

* Cypress shares up as much as 41 pct
(Adds details, analyst comment, updates share movement)

BANGALORE, July 19 (BestGrowthStock) – Hedge fund Ramius said it
offered to buy drugmaker Cypress Bioscience Inc (CYPB.O: ) for
about $154 million, or $4 a share, in cash, and demanded the
board to abstain from approving any further acquisitions.

Ramius, which said it currently holds a 9.9 percent stake
in Cypress, said the offer represents a 60 percent premium to
Cypress’ Friday closing price.

“Aside from the boost in valuation today, we now know that
a motivated holder wants changes. This appears inevitable, and
management or board owns a minimal equity position to stop it,”
Roth Capital Partners analyst Scott Henry said in a note.

According to Thomson Reuters data, insiders own about 1.33
percent of shares outstanding in the company.

“We find it unlikely that $4 a share is enough, and the
true number could be significantly higher,” he said.

Cypress, currently has one approved fibromyalgia drug
Savella in the United States and two different blood tests —
one to diagnose Rheumatoid Arthritis (RA) and the other to
measure the active metabolites of methotrexate, which is used
for the treatment of RA.

Oppenheimer & Co analyst Brian Abrahams said in a note to
clients that he believes “Savella royalties may be worth more
than the offer suggests.”

“We believe $4 to $5 per share may be a more bullish-case
value for the royalty, although it could be difficult to derive
external bids for this full value,” Abrahams said.

On June 20, Cypress signed a licensing deal with Israeli
drugmaker BioLineRx (BLRX.TA: ) for its antipsychotic drug
BL-1020, which disappointed some investors. [ID:nSGE65K0JN]

Ramius said Cypress was making “increasingly risky
investments with shareholder money,” and raised concerns about
the company’s strategy to acquire and internally develop highly
speculative, early stage drugs.

Cypress Bioscience was not immediately available for
comment.

Prior to the BioLine deal in June, Cypress shares were
trading at $4.34.

However, Cypress’ shares, which touched a high of $3.53,
failed to reach $4 in early trade, indicating that it is
unlikely that a deal will go through.
Ramius also said it would be willing to consider a deal
structure that would allow Cypress to continue developing its
recently acquired drug candidate, BL-1020, if they can fund it
themselves or arrange for third-party financing.

“We are ready, willing, and able to close this transaction
expeditiously and expect 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,” Ramius said in a letter to Cypress management.

Cypress shares rose 32 percent to $3.31 Monday on Nasdaq.

Stock Market Report

(Reporting by Esha Dey and Anand Basu in Bangalore; Editing by
Roshni Menon)

UPDATE 4-Ramius offers to buy Cypress Bioscience for $154 mln