Therapeutics and personalized medicine services provide Cypress Bioscience, Inc. (CYPB) confirmed Monday that it has received an unsolicited buyout offer from hedge fund Ramius LLC to acquire the company for $4.00 per share in cash. Further, the company said its board of directors will review the proposal with its financial and legal advisors, and advised stockholders to take no action at the current point of time.
Earlier in the day, Ramius Value and Opportunity Advisors LLC, a unit of Ramius LLC, said it has offered to acquire Cypress Bioscience for $4 per share in cash. Further, Ramius plans to support the development of BL-1020, with a third party financing. Cypress acquired Israeli drug development company BioLine's antipsychotic BL-1020 or CYP-1020, a treatment for schizophrenia, in June.
The Ramius offer represents a 60% premium over the July 16 closing price of Cypress's common stock of $2.50 per share. Based on the average closing price since Cypress' acquisition of BL-1020, the offer represents a premium of 74%. Ramius currently owns 9.9% of the outstanding common stock of Cypress, making it one of the company's largest shareholders.
New York based Ramius said it would be willing to consider an acquisition structure that would allow Cypress' management to continue the development of the recently acquired BL-1020 if they are able to fund the required financing for the Phase IIb trial themselves or from a third party financing source. Management and third party financing could retain a 50% interest in BL-1020, with the other 50% interest retained on a pro-rata basis by all existing Cypress shareholders.
In its letter to Cypress board, Ramius asked to cease and desist from approving any further acquisitions, licensing agreements or business combinations. The letter said such a move could endanger realization of full and fair value for the investment.
Ramius said it is prepared to enter into immediate discussions with the board of directors of Cypress to consummate a transaction. The company observed that the performance of Cypress has been and continues to be unacceptable to shareholders, and ill-conceived acquisitions and other internal investments have contributed to significant destruction of shareholder value through the last five years.
CYPB closed Monday's regular trading session at $3.35, up $0.85 or 34.00% on a volume of 16.55 million shares.
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