After five months of opposition from its largest shareholder and several postponements, Staar Surgical Co. terminated its proposed $1.6 billion sale to Alcon.
As a result, Staar last week restructured its board as part of a deal with Broadwood Partners, its largest shareholder, which holds an about 30% stake in the company, leading to the removal of Chair Elizabeth Yeu and Chief Executive Stephen Farrell, who will step down as CEO by the end of this month.
Replacing them are Neal Bradsher and Richard LeBuhn of Broadwood, as well Christopher Wang of Yunqi Capital Limited, another large stakeholder of Staar.
Staar said that it plans to make additional announcements regarding the company’s next chair and CEO in the near term.
Staar failed to get enough votes to approve the deal at a special stockholder meeting held on Jan. 6.
“The Board approved the Alcon agreement because we determined that it was in the best interests of STAAR stockholders,” Farrell said in a statement.
“We respect the outcome of the vote and look forward to working collaboratively with shareholders to ensure the best possible outcome for STAAR as a stand-alone company.”
The deal, first announced in August, was revised last month with Alcon increasing its original $1.5 billion offer, or $28 per share, to $1.6 billion, representing an additional $150 million. Alcon also announced that it would reduce payments to Staar executives.
The merger amendments came after Staar’s largest shareholder, Broadwood criticized the deal’s terms, including the valuation and process, prompting Staar to open a 30-day “go-shop” period, during which no other proposals were received.
“We thank our fellow shareholders for their attention during this process and for rejecting the proposed acquisition of STAAR by Alcon at today’s Special Meeting,” Bradsher, founder and president of Broadwood, said in a statement.
When Alcon made its initial offer in August, the shares soared 46% in one trading session from $18.49 to $27.02. They hovered for a few months around $27 until they began declining when it became clear that the board may lack the votes.
After the Jan. 6 decision was announced, the stock declined as much as 17% to a low of $19.82. By press time, the shares recovered to $21.34 each with a $1.1 billion market cap (Nasdaq: STAA).
Broadwood Succeeds in Removing Staar Directors
In a bid to prevent Staar from delaying the vote, Broadwood notified the company’s board in October of its intent to remove several directors.
Broadwood said that it’s seeking to remove Farrell, Yeu and Arthur Butcher, calling them “most responsible for orchestrating and perpetuating this misbegotten proposed transaction.”
In the past, Broadwood has accused the board of having conflicts of interest with Alcon, including board chair Yeu, who had a consulting arrangement with Alcon, which Staar defended as insignificant and not impairing “her independent business judgement.”
Broadwood also found an issue with the fact that Farrell stood to receive a $24 million payout if the proposed transaction went through. As for Butcher, Broadwood said that he bears responsibility for the “egregious ‘golden parachute’ compensation to Staar’s executives.”
Results of the Vote
More than 27 million shareholders voted against the merger, compared to nearly 15 million votes in favor of it with 1 million absentations, according to an 8-K filing.
“Now, STAA is left standing on its own,” BTIG analysts Ryan Zimmerman and Iseult McMahon wrote in a Jan. 6 note to investors. “ALC could still put in another tender offer but is more likely to move on from this, focusing on its other products and existing markets.”
The firm reiterated a Neutral rating for Staar, saying that how Staar emerges from this period depends on management and the health of its broader end-markets, such as China, which it still views as soft based on peer ophthalmic companies in China.
Staar has been facing weakened demand in China, by far its largest market, since Q1 of 2025, when sales fell 45% caused by its two distributors consuming their existing inventories.
The company in November posted third-quarter results. Net sales increased 7% to $94.7 million, above the $92 million consensus estimate.
