New offer is based on Cypress commencing exclusive negotiations today.

Ramius has given Cypress Bioscience one day to respond to its new proposal to take over the firm, which bumps up the per share acquisition price from $4.25 to $5.50. The firm has also extended the deadline for the $4.25 per share tender by seven days.

Yesterday, Ramius V&O Acquisition, a subsidiary of Ramius, sent a letter to Cypress Bioscience’s board of directors outlining its willingness to acquire all Cypress’ outstanding common stock for $5.50 per share. The offer is conditioned upon Cypress commencing exclusive negotiations with Ramius no later than today and entering into a definitive merger agreement no later than Sunday, December 12.

Ramius currently owns 9.9% of Cypress. On July 17 the firm made a $4 per share bid to fully acquire Cypress. In August Cypress publicly turned down the unsolicited offer, saying that it undervalued the firm. Cypress had closed trading the previous day at $2.50.

Ramius then commenced a tender offer on September 15 to purchase all the shares of Cypress it does not currently own for $4.25 per share. Today’s $5.50 offer represents a 120% premium over the $2.50 closing price of Cypress’ stock on July 16. It closed yesterday at $4.06.

Ramius says that to facilitate discussions it is also extending the tender offer for $4.25 per share until 12:00 am EST on December 17. The offer was previously scheduled to expire at 12:00 am EST on December 10, 2010.

As of the close of business on December 9, approximately 2,993,774 shares of common stock of Cypress, representing approximately 7.8% of all outstanding shares, were validly tendered and not withdrawn pursuant to the tender offer. This does not include the 3,815,000 shares owned by Ramius and its affiliates.

Ramius has also entered into a confidentiality agreement with Cypress to conduct due diligence in connection with its tender offer or a possible negotiated transaction with Cypress.

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