STAAR Surgical Climbs as Top Shareholder Rejects Alcon Offer
Broadwood Partners, holding a 30% stake, contests the takeover bid, arguing it undervalues the innovative lens maker by more than 40%.
Shares of STAAR Surgical Company (NASDAQ: STAA) gained ground in recent trading, climbing more than 3% after its largest shareholder mounted a formidable challenge to the company's proposed acquisition by eye-care giant Alcon (ALC).
Broadwood Partners, an investment firm that holds a commanding 30.2% stake in STAAR Surgical, issued an open letter to the company's board expressing confidence that the pending transaction will be rejected by shareholders. The firm argues that the current deal, reportedly structured around $30 per share, significantly undervalues the manufacturer of implantable eye lenses.
In its letter, Broadwood asserted that a more appropriate valuation for STAAR Surgical would be upwards of $50 per share, representing a substantial premium to both the current market price and the acquisition offer. The activist investor's stance is bolstered by recommendations from influential proxy advisory firms Glass Lewis and Egan-Jones, both of which have reportedly sided with Broadwood against the deal.
The market has responded to this public battle for corporate control. STAAR's stock rose approximately 3.1% to $25.57 in the session following the news. This price remains well below the mooted $30 offer from Alcon and even further from Broadwood's target, suggesting investors are weighing the increased likelihood of the deal's failure against the potential for a higher future valuation.
With a market capitalization of roughly $1.16 billion, STAAR Surgical is a key innovator in the ophthalmic surgery space. The company specializes in implantable lenses, including its proprietary Collamer technology for cataract and refractive surgeries. The proposed acquisition by Alcon, a global leader in eye care, was seen as a strategic move to consolidate market position and integrate STAAR's innovative product line.
However, the opposition from a shareholder with such a significant holding creates a major obstacle for the transaction’s approval. The current Wall Street consensus analyst price target for STAA sits at $26.56, indicating that Broadwood's $50+ valuation is considerably more bullish than the broader market's short-term expectations.
Broadwood has signaled its long-term commitment, pledging its cooperation and support for STAAR's board and management to continue as a standalone company should the shareholder vote fail. This move puts pressure on STAAR's board to either renegotiate for a significantly higher price or walk away from the deal and focus on the standalone growth strategy that its largest investor so forcefully advocates.