STAAR and Broadwood clash over proposed Alcon merger

STAAR and Broadwood Partners have recently pleaded their case in the proposed merger between STAAR and Alcon, issuing statements both for and against the move, respectively. This follows the expiration of the “window shop” period in the proposed merger agreement.

Broadwood Partners holds approximately 27.5% of the outstanding common stock of STAAR, making them the largest stockholder, and is against the merger.¹ Recently, they filed a definitive proxy statement and GREEN proxy card with the US Securities and Exchange Commission (SEC) and sent a letter to fellow shareholders. Joining Broadwood in opposition is Yunqi Capital, owner of 5.1% of the outstanding shares. Standing alongside STAAR, however, is Soleus Capital Master Fund, the company’s second-largest active stockholder, owning approximately 6% of STAAR’s outstanding shares.

Under the terms of the agreement, Alcon will purchase all outstanding shares of STAAR common stock for $28 per share in cash. These outstanding shares represent approximately a 59% premium to STAAR’s 90-day volume-weighted average price and a 51% premium to the closing price of STAAR common stock on August 4, 2025. According to the company, this transaction represents a total equity value of approximately $1.5 billion. Additional details on the deal can be found in prior coverage.

In the letter, Broadwood Partners notes that it has been in support of STAAR for over 30 years and believes STAAR’s EVO Implantable Collamer Lens technology is “ideally positioned to emerge as the superior choice for surgeons and patients in the global refractive surgery market.”¹

Broadwood goes on to mention missteps within STAAR over the years, citing how under prior leadership, STAAR executed poorly in China, causing its revenue to temporarily decline and profits to “evaporate.” However, Broadwood does state that these issues are lessening, and the company is forecasting a return to growth and profitability. Broadwood states that it is because of this potential return to profit that it is disappointed in the STAAR board of directors for deciding to sell. Additionally, they state that the price does not reflect the value and future promise of the business.

The statement also notes that STAAR has “$200 million in cash, no debt, leading technology, a privileged position in large markets, and a clear path to growth and profit margin expansion in the near term.” Additionally, Broadwood claims that the choice to sell is premature amid a “temporarily strained macroeconomic environment.” Broadwood notes that the board of STAAR failed to disclose the “substantial turnaround in the company’s prospects” in its second-quarter earnings report, as well as management’s financial projections, only releasing these projections when STAAR filed its preliminary proxy statement.

Broadwood states that the above-mentioned "window shop" period is no substitute for a "well-run strategic alternatives process." They note that, to their knowledge, only 10 proposals during the “window shop” period in the last 25 years have succeeded. This is because interested parties are deterred from attempting to break up signed transactions due to the procedural and legal hurdles they would have to overcome, according to Broadwood.

The letter to shareholders goes on to claim that the decision to work with Alcon is “troubling,” noting that STAAR failed to involve proactive outreach to an alternative counterparty. While the “window shop” period allowed STAAR to accept a competing acquisition proposal and terminate the Alcon merger agreement with a nominal termination fee of 1% of the Alcon merger transaction value, Broadwood notes STAAR failed to attempt to find this competitor.

Broadwood noted that a STAAR board member was contacted by at least 2 potential counterparties to express their interest in acquiring STAAR during the same month that STAAR was engaging with Alcon. Broadwood goes on to accuse STAAR of withholding diligence materials or access to management from the interested parties until hours before the merger agreement with Alcon was signed.

One of the more damning accusations from Broadwood states that STAAR’s chair has had a “longstanding consulting relationship with Alcon” that paid her “hundreds of thousands of dollars” over a 7-year period. Broadwood notes that to its knowledge, this was not discussed with fellow board members until it was insisted upon by Broadwood days before the transaction was announced. Additionally, Broadwood claims that the transaction was influenced by the board’s numerous business entanglements with Alcon and management’s personal financial interests.

Additionally, Broadwood claims that the potential financial gain of the CEO, Stephen Farrell, who will receive approximately $24 million in compensation “for just 5 months of work,” is a conflict.

Broadwood claims that because no other bidders were included in the process, creating no competitive tension, Alcon was not forced to put its best proposal forward. Resulting in a 55% decrease in a proposed acquisition from Alcon in October 2024 for $62 per share. It ended the statement to shareholders urging them to vote against the merger, noting that should it be rejected, they will assist with the recruiting and nomination of new directors and executives, if necessary.

STAAR’s statement was issued from CEO Stephen Farrell on behalf of the board of directors.² The statement refutes the claim that the agreement with Alcon was done with haste, stating that the agreement followed more than a year of consideration by STAAR’s board of strategic alternatives available to STAAR. Farrell notes that the board met over 20 times to discuss related matters in the first 8 months of 2025.

Farrell notes that Broadwood has a “fundamentally different view of the company’s growth trajectory that is based on assumptions that are not just aggressive; they are unachievable.” He notes that STAAR needs a partner like Alcon to broaden its portfolio and better address its rapidly evolving risks, considering STAAR is a single-product company in an “increasingly competitive market.” Farrell says that STAAR faces substantial risk as a standalone company, including “overweight exposure to China, increasing competition, a limited product offering, historical inability to penetrate the market beyond high myopia patients, and tariff risk.”

Again, refuting the claim by Broadwood that the agreement was done in haste, Farrell claims that the board are “keenly aware of other potential buyers,” and regular interactions with other industry participants informed the board’s conclusion that no other bidders would compete with the value presented by the Alcon offer. Farrell also notes the fact that STAAR has not received any acquisition or merger proposal for more than 10 years from any interested party outside of Alcon.

While Broadwood claims that the “window shop” period was inadequate, STAAR claims the period “provided ample time for any interested and capable party to make a proposal, and the reduced, nominal break-up fee for competing proposals received during this period established a clear path for potential buyers to come forward.”

STAAR goes on to refute claims of the 2 potential counterparties, stating that they “emailed only vague communications, not proposals,” and neither submitted a proposal following follow-up from the CEO.

While Broadwood states that selling the company is premature, STAAR states a 55% reduction in net sales year over year and no pending clinical study that would be "market-moving news" or a "significant value creation event" as reason enough

Regarding the previous proposed purchase from Alcon in 2024, STAAR notes that Broadwood’s claim ignores the fact that Alcon withdrew its offer after “diligence of underlying sales and demand concerns.” STAAR also refutes the claims that the sale is influenced by the financial gain of the CEO, stating that the acceleration of vesting and payout STAAR awards in cash applies to all employees and is not exclusive to executive-level employees.

STAAR also strongly refutes the claims from Broadwood that the move is influenced by a relationship with Alcon, stating that these relationships do not impair the board chair’s independence, in reference to the board member with a “longstanding consulting relationship with Alcon,” according to Broadwood.

STAAR noted that the board was aware of the member’s arrangements with Alcon and that the member terminated their consulting arrangement with Alcon in October 2024 and has thus not received any consulting fees since November 2024. The company ended the letter urging all members to vote for the Alcon acquisition.

References:

1. Broadwood Partners Files Definitive Proxy Statement Soliciting STAAR Surgical Stockholders to Vote “AGAINST” Proposed Acquisition by Alcon. Published September 24, 2025. Accessed September 26, 2025. https://www.businesswire.com/news/home/20250924319207/en/Broadwood-Partners-Files-Definitive-Proxy-Statement-Soliciting-STAAR-Surgical-Stockholders-to-Vote-AGAINST-Proposed-Acquisition-by-Alcon

2. STAAR Surgical Publishes Presentation Highlighting Compelling, Certain Cash Value Offered by Alcon Merger and Meaningful Downside Risks if Alcon Merger is not Approved. Published September 26, 2025. Accessed September 26, 2025. https://www.businesswire.com/news/home/20250925443393/en/STAAR-Surgical-Publishes-Presentation-Highlighting-Compelling-Certain-Cash-Value-Offered-by-Alcon-Merger-and-Meaningful-Downside-Risks-if-Alcon-Merger-is-not-Approved

3. Harp MD. STAAR Surgical confirms expiration of “window shop” period in Alcon merger agreement. Published September 22, 2025. Accessed September 26, 2025. https://www.ophthalmologytimes.com/view/staar-surgical-confirms-expiration-of-window-shop-period-in-alcon-merger-agreement