STAAR Surgical Stock Plunges as Shareholders Reject $1.6B Alcon Merger
The collapse of the deal unwinds a significant acquisition premium, a victory for activist investors who argued the bid undervalued the company's standalone prospects.
Shares of STAAR Surgical Company (NASDAQ: STAA) plummeted more than 10% on Tuesday after the company announced its shareholders had voted to reject a proposed $1.6 billion acquisition by eye-care giant Alcon (ALC).
The stock closed down 10.16% at $21.51, erasing a significant acquisition premium that had been priced in by the market. The vote's failure terminates the merger agreement, forcing STAAR Surgical to continue as a standalone company and marking a significant victory for activist investors who had staunchly opposed the deal.
The proposed transaction, which would have seen Alcon acquire STAAR for $30.75 per share in cash, was terminated after failing to secure the necessary approval at a special meeting of stockholders, according to a company press release. As a result of the termination, neither company will be required to pay a termination fee.
The outcome is a major win for STAAR’s largest shareholder, Broadwood Partners, which holds a 30.2% stake and had actively campaigned against the buyout. The activist firm consistently argued that Alcon’s offer fundamentally undervalued STAAR's growth potential, particularly its flagship EVO Implantable Collamer® Lenses (ICLs). In a statement following the vote, Broadwood reiterated its confidence, citing its own financial model that projected a "clear path to a $50 per share stock price next year."
The decision from shareholders went directly against the recommendation of STAAR’s own board of directors. The board had supported the Alcon offer, arguing it provided a "compelling, certain, premium cash value" to stockholders. Independent proxy advisory firm Institutional Shareholder Services (ISS) and several Wall Street analysts had also recommended shareholders approve the deal, pointing to the immediate cash return and the risks associated with remaining an independent entity.
Analysts at BTIG had explicitly cautioned that STAAR shares would likely decline if the deal failed, a prediction that materialized swiftly in Tuesday's trading. Mizuho had deemed the valuation of approximately 4.5 times forward enterprise value to sales as "sufficiently fair." The divergence highlights the conflict between the board's desire for a guaranteed premium and the conviction of key shareholders in the company's long-term, independent trajectory.
With the merger now off the table, STAAR Surgical's future hinges on its ability to execute on its standalone strategy. The Lake Forest, California-based company is a leading innovator in ophthalmic surgery, specializing in implantable lenses designed to correct vision. In a statement, the company confirmed it will now focus on driving profitable sales growth and operational efficiencies.
The market's immediate reaction reflects the uncertainty ahead. While activist investors have secured the independence they sought, STAAR's management is now under immense pressure to deliver the growth that shareholders chose over Alcon's certain cash offer. The company's performance, and its ability to capitalize on the a projected recovery in the global refractive market, will be under intense scrutiny as it navigates its path forward alone.