Cypress Bioscience Inc (CYPB)

[eastunder]

Cypress Bioscience for 2nd time

Fri Dec 10, 2010 10:51am EST

* New offer at 35 pct premium to stock's Thursday close

* Deal conditioned on starting talks no later than Dec 10

Dec 10 (Reuters) - Hedge fund Ramius LLC raised its offer for Cypress Bioscience Inc (CYPB.O) by 29 percent, but said the drugmaker should begin exclusive negotiations with it immediately.

The sweetened bid, valued at about $212 million, drove Cypress shares up 21 percent to $4.91 on Friday on Nasdaq. They had gained 16 percent since Ramius first offered to buy the company.

Ramius, which already controls about 10 percent of the company, is now offering to acquire all outstanding Cypress shares at $5.50 a share, a premium of 35 percent to Thursday's close and $1.25 more than its previous bid. [ID:nSGE68E0G6]

Cypress is facing shareholder revolt over its strategy since June, when it signed a deal to license a schizophrenia drug, which is years away from reaching market and carries significant clinical risk. [ID:nSGE65K0JN]

The company had rejected Ramius' initial $4-a-share buyout proposal, saying it grossly undervalued the company. [ID:nSGE675061]

The new offer is conditioned upon Cypress commencing exclusive negotiations with Ramius no later than Dec. 10 and entering into a definitive merger agreement by no later than Dec. 12, Ramius said. (Reporting by Anand Basu in Bangalore; Editing by Jarshad Kakkrakandy)