Two of Staar Surgical Co.’s largest shareholders are opposing its proposed sale to Alcon Inc., putting the $1.5 billion deal at risk.
Broadwood Partners L.P., which holds a 27.5% stake in Staar, last week issued a letter to shareholders urging them to vote against the sale, questioning the terms of the deal.
“We believe that Staar’s management lowered its projections to justify a low-ball valuation in a deal that would yield great financial rewards for management but not Staar’s shareholders,” the investment firm wrote in the Oct. 8 letter.
The opposition comes after the Lake Forest-based eye lens maker announced on Aug. 5 that Geneva-based Alcon would be acquiring the company for $28 per share, or $1.5 billion. Staar said the deal represents a 51% premium to the closing price of the stock as of Aug. 4 at $18.49.
In its letter, Broadwood, Staar’s largest shareholder, referred to itself as one of Staar’s “most committed investors for more than 30 years.”
“We are strong believers in Staar’s opportunity to deliver significant and enduring value for shareholders,” the letter states.
“Just a few short months ago, it appeared that Staar’s Board of Directors and management team shared our confidence. In fact, management spent most of 2025 publicly touting the progress on its turnaround plan, while assuring investors that short-term challenges were abating and that Staar’s future was bright.”
Yunqi Capital Limited, which owns 5.1% of Staar’s common stock, has also expressed its intent to vote against the merger. The Hong Kong-based investment manager said it believes the Chinese market is recovering and that “Alcon’s bid for Staar is clearly opportunistic.”
Broadwood said Staar is worth $41 a share, or about 46% higher than Alcon is paying.
Since 2021, when it topped $150 each, the stock price has collapsed as it was slow to diverge from its reliance on sales to China.
The shareholder meeting to vote on the acquisition is scheduled for Oct. 23.
Alcon and Staar had said they anticipate the transaction to close within six to 12 months of the initial acquisition announcement, pending regulatory approval and shareholder approval.
Staar Wars
Broadwood said that Alcon made two offers to buy Staar before the one announced in August.
At first, it offered $58 per share in April of 2024, which Staar turned down, before offering $55 per share plus a contingent value right worth $7 per share six months later.
This month, Broadwood referred to the $28 share price as “woefully inadequate,” indicating that the valuation should be above $41 per share based on management’s initial projections and Staar’s actual cost of capital.
Staar, in response, said it believes it cannot return to previous growth rates or profitability due to challenges including geopolitical risks, increased competition, an inability to break into the broader myopia market and a limited product offering.
“While Staar has innovative technology and management has been aggressively improving the cost profile of the business, Staar is a single product company serving a narrow portion of an increasingly competitive market that has experienced demand challenges for several years in its largest market; Staar needs a partner like Alcon to broaden its portfolio and better address its rapidly evolving risks,” Chief Executive Stephen Farrell said in a statement.
The company announced that its second largest shareholder, Soleus Capital Master Fund L.P., with 6% of shares informed the board of its intent to vote in favor of the acquisition.
Some analysts agreed that the acquisition is the best path forward for the company in the current environment.
“Overall, we expect the deal to close,” Stephens analysts Mason Carrico, Harrison Parsons and Ben Mee wrote in a Sept. 30 note to investors.
“However, if the deal were to fall through, we’d expect shares to respond negatively due to the limited visibility into moving past the macroeconomic challenges related to China and the current acquisition premium baked into the stock fading.”
Q2 Results Announced
A day after announcing the acquisition, Staar reported second-quarter results.
Revenue decreased 55% to $44.3 million due to the planned reduction of channel inventory in China, which made up more than half of its net sales last year, the company said.
Net sales excluding China rose 10% to $39 million.
The company, which competes with LASIK surgery, has been struggling this year amid weakened demand for its implantable lenses in China.
Shares first dropped 25% in February when it reported fourth-quarter sales falling 36% to $49 million. Two weeks later, it appointed Farrell, who was the lead independent director, as chief executive, replacing Tom Frinzi, who spent two years as CEO and three years as chairman.
Since then, the company has withdrawn its 2025 outlook, citing “global economic uncertainty and evolving tariff policies,” and implemented a $30 million buyback of its common stock. During the second quarter, it repurchased approximately 261,000 shares for a total of $4.5 million.
