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CYPB-Ramius Sends Letter to the Board of Cypress
Cypress Bioscience (NASDAQ:CYPB)
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Today : Wednesday 11 August 2010
Ramius Value and Opportunity Advisors LLC, a subsidiary of Ramius LLC (collectively, "Ramius"), today announced that it delivered a letter to the Board of Directors of Cypress Bioscience, Inc. ("Cypress" or "the Company") (Nasdaq: CYPB). In the letter, Ramius reiterated its offer to acquire the Company for $4.00 per share in cash plus a potential 50% interest in BL-1020 for total implied consideration of $4.39 per share. Ramius clarified the terms of its acquisition proposal and expressed a willingness to consider raising the value of its acquisition proposal in the event that Ramius is granted limited due diligence and the Company agrees to negotiate in good faith around consummating a transaction.

Ramius further stated that it believes the Company's current strategy will destroy significant shareholder value and that instead of engaging in a meaningful dialogue around maximizing value for shareholders, the Company has instead chosen to hide behind self-serving and inaccurate statements around Ramius' proposal and the views of shareholders.

Ramius Partner Managing Director Jeffrey C. Smith stated, "The clear message we have received from a large number of shareholders is that shareholders want maximum value for their shares now through a negotiated transaction and that this is clearly a better alternative than management continuing with its current strategy."

Mr. Smith went on to say, "We continue to be ready, willing and able to engage in meaningful negotiations with the Company to structure a transaction that will maximize value for all shareholders."

The full text of the letter follows:

Dear Jean-Pierre Millon:

Ramius Value and Opportunity Advisors LLC, together with its affiliates (collectively, "Ramius"), has reviewed the press release issued by Cypress Bioscience Inc. ("Cypress" or the "Company") on August 6, 2010. We remain committed to pursuing an acquisition of Cypress and are extremely disappointed that the Company has not taken us up on our recent offer to engage in meaningful negotiations. We are also in receipt of your letter dated August 5, 2010 claiming that our acquisition proposal "grossly undervalues [Cypress'] current business and future prospects" and that the Company "will continue to consider seriously any bona fide acquisition proposal or other transaction…." Although we fail to see how a proposal representing over a 60% premium to the unaffected stock price could grossly undervalue the Company, let us remind you that we have already expressed our willingness to allow for a "go shop" period in a definitive agreement or to participate in an auction process to ensure that shareholders receive fully negotiated, full and fair value for their shares. A process structured in either way should address your concerns and provide the Board with comfort that shareholders will receive maximum value. We have expressed to your financial advisors on multiple occasions that we would be willing to discuss raising the value of our acquisition proposal in the event that we are granted limited due diligence and the Company agrees to negotiate in good faith around consummating a transaction.

Based upon information available to us today, we continue to believe that our proposal to acquire the Company provides full and fair value to shareholders and is a far better alternative to the Company's current misguided and poorly executed strategy. The Company's current plan to pursue highly speculative acquisitions is fraught with risk, will deplete the Company's cash resources, and we believe it will continue to destroy shareholder value. Based on the Company's stock price performance prior to our acquisition proposal, clearly most shareholders agree.

Instead of engaging in a meaningful dialogue with us, the Company has chosen to hide behind self-serving and inaccurate statements regarding our proposal to acquire the Company. Our proposal is not just $4.00 per share in cash. As clearly stated in our letter to the Company dated July 19, 2010, in addition to $4.00 per share in cash, our proposal also includes a willingness to consider an acquisition structure that would allow shareholders to retain a 50% interest in BL-1020 if management or a third party is willing to fund the costs of the Phase IIb trial. Assuming management and the Board continue to believe that Cypress paid a fair price of $30 million for the US licensing rights to BL-1020, our proposal for existing shareholders to retain a 50% interest in the drug would imply additional value of at least $0.39 per share in excess of our $4.00 cash proposal, for total implied consideration of $4.39 per share. This represents a premium of at least 76% to the unaffected stock price on the day prior to our acquisition proposal. We fail to see how management, the Board, and its advisors could reject such a high premium proposal without engaging in meaningful negotiations or providing us with additional due diligence information to allow us to consider revising our offer.