Cypress Bioscience Inc. (NSDQ:CYPB) sold its diagnostics business to Exagen Diagnostics Inc.
The deal includes $4 million in up-front payments over two years, with additional milestone and royalty payments that could boost the value of the transaction to $8 million. All of Cypress’ diagnostics employees will be offered jobs at Exagen, according to Cypress.
The company based the sale of the diagnostics business on a previous decision of the board, independent of the board’s attempt to persuade the company’s shareholders to turn down Ramius’ offer. Although the Cypress board unanimously rejected the investment firm’s tender offer, 5.4 percent, or 2.1 million shares, worth of Cypress were eventually turned over to Ramius. The hedge fund, which has a history of leveraging hand-picked members onto the boards of companies it’s invested in, is already a major shareholder in the company Cypress.
Ramius said it extended its $4.25-per-share offer for Cypress yesterday. The offer represents a 70 percent premium over Cypress stock’s closing price July 16, the day before the proposed take-over was announced. Originally slated to expire at midnight tonight, the firm extended the offer until Nov. 10. Ramius also entered into a confidentiality agreement with Cypress for due diligence related to the prospective cash buy-out, which it claims does not affect their ability to solicit shareholders’ support ahead of Cypress’ 2011 shareholders’ meeting.
The Cypress board contends that Ramius’ offer "grossly undervalues" the company’s current and future business, and "is highly conditional rendering it illusory, and is not in the best interests of Cypress and its stockholders (other than Ramius and its affiliates)."