STAAR Surgical Company’s (NASDAQ:STAA) contested sale to Alcon AG (NYSE:ALC) has escalated after its largest shareholder took the first formal step toward a proxy fight to defeat the $28-per-share merger.
Earlier Monday, Broadwood Partners, STAAR’s largest holder with a 27.4% stake accumulated over three decades, filed a preliminary proxy statement with the SEC, urging fellow shareholders to vote “AGAINST” the merger and the related golden-parachute advisory vote. The hedge fund plans to mail GREEN proxy cards to shareholders in advance of the special meeting, a significant escalation from its September 2 press release criticizing the deal.
STAAR Surgical, based in California, makes implantable collamer lenses (ICLs) and other refractive products used to correct vision, often marketed as an alternative to LASIK for clients with mid-to-high myopia, or nearsightedness. Alcon, a Swiss-based eye-care giant, is a global leader in LASIK laser systems and refractive surgical technologies.
Alcon had previously offered $55 per share plus a $7 contingent value right in 2024, but STAAR rejected the bid amid stronger sales and a higher valuation. Since then, a sharp downturn in its largest market, China, including an inventory glut and slowing demand for elective vision procedures led to a sharp decline in STAAR’s growth and stock price, paving the way for Alcon’s lower 2025 bid.
Broadwood’s filing marks the first organized campaign against the Alcon transaction. In its statement, Broadwood alleges that STAAR’s board conducted an “effectively exclusive” negotiation with Alcon and left other interested parties little or no opportunity to make competing offers.
The New York hedge fund again pointed out that two unnamed suitors, termed “Party A” and “Party B” in STAAR’s Schedule 14A filing, contacted a board member just before the merger agreement was signed on August 4. The board gave them only hours to submit terms, which Broadwood argues virtually guaranteed no rival bid could emerge.
Broadwood also restated that the $28-per-share offer significantly undervalues STAAR. The fund continued to highlight Alcon’s previous offer of $55 per share plus a $7 CVR, and calculates today’s deal at roughly 4.0× 2026 revenue, a 15–20% discount to med-tech peers.
The hedge fund also ties the timing of Alcon’s move to a rebound at STAAR:
Q2 2025 Results: Costs lowered and China inventory correction largely complete.
Pending Clinical Trial: A randomized EVO ICL versus LASIK trial (“EVOlve”) expected to report data soon, which Broadwood argues could boost STAAR’s valuation if favorable.
Broadwood’s proxy filing spotlights STAAR’s change-of-control payouts, asserting that senior executives will collect more than $55 million in accelerated equity awards, including about $24 million for CEO Stephen Farrell, who had been in the job just five months when the deal was struck. The hedge fund calls these single-trigger awards a “conflict of interest” and is urging shareholders to reject them alongside the merger.
Broadwood’s filing goes beyond a vote-no effort. The investor signals it could nominate new directors and executives to run STAAR as a standalone company if the merger is voted down. This positions Broadwood for a potential follow-on proxy contest in 2026 if it wins the merger vote but remains dissatisfied with STAAR’s governance.
STAAR’s “window-shop” period expires September 19. After that, the termination fee owed to Alcon if STAAR accepts another offer nearly quadruples, making a rival bid less likely.
STAAR, on the other hand, contends the Alcon merger gives shareholders a premium exit they’re unlikely to match on a standalone basis. In a September 2 release following Broadwood’s initial statements critiquing the merger, the company emphasized that the $28 cash offer represents a 51% premium to its Aug. 4 closing price and a 59% premium to its 90-day VWAP, far above the $18.49 share price the day before the announcement.
STAAR has pushed back firmly on Broadwood’s assertions. “Broadwood’s perspective is inconsistent with what we are hearing from other stockholders and analysts who are highly supportive of this transaction,” a STAAR spokesperson said in a statement to Investing.com, “The Board unanimously determined that the merger with Alcon is in the best interests of stockholders as it provides compelling, premium cash value.”
“The Board believes that the value stockholders will receive exceeds what STAAR could achieve on a standalone basis in the foreseeable future, particularly given STAAR’s lower growth rate and the resulting impact on its valuation, and the substantial competitive and macro challenges in the markets STAAR serves,” the spokesperson said.
A person familiar with the matter told Investing.com that despite STAAR’s proprietary technology, “there’s no sign” that sales in China, the company’s largest market, will fully recover and that the company may have “saturated” the available market. The source also pointed out that STAAR’s implantable collamer lenses (ICLs) are more expensive than solutions such as LASIK or SMILE, which could slow demand in a softer economy.
Supporters of the deal counter that rumors of a potential STAAR–Alcon merger surfaced last year, and no formal suitors appeared until Party A and Party B made contact with a STAAR board member just a day before the merger agreement was signed. They point out that in the entire year leading up to the new merger agreement, no offers were made, unlike the competitive interest typical when news breaks about a target company.
STAAR shareholders will vote on the merger and the golden-parachute advisory proposal at a special meeting later this fall. The filing sets the stage for Broadwood to begin soliciting other shareholders, throwing the acquisition into growing doubt ahead of a potential full-scale proxy fight this fall.
Source :
https://www.investing.com/news/stock-market-news/broadwood-files-preliminary-proxy-to-block-staar-surgical-sale-company-responds-4239606
