STAAR Surgical Stock Plunges 13% as Shareholders Reject Alcon Takeover
The rejection marks a victory for activist investor Broadwood Partners, which opposed the $30.75-per-share deal, arguing it undervalued the ophthalmic device maker.
Shares of STAAR Surgical (STAA) plummeted nearly 13% in Tuesday trading after the company's shareholders voted to reject a proposed acquisition by eye care giant Alcon (ALC), effectively terminating the deal.
The vote is a significant victory for activist investor Broadwood Partners, STAAR's largest shareholder with a 30.2% stake. Broadwood had mounted a vocal campaign against the takeover, arguing the offer failed to recognize the company's intrinsic value and its strong prospects as a standalone entity.
STAAR's stock fell $3.06 to close at $20.88, wiping out a significant portion of the premium that had been priced in since the deal was announced. The company confirmed in a statement that the merger agreement with Alcon has been terminated following the outcome of the shareholder vote held on January 6.
The proposed transaction valued STAAR at $30.75 per share. However, Broadwood contended that the sale process was flawed and that the offer, even after being raised from an initial $28 per share, was inadequate. In a statement released Tuesday, Broadwood celebrated the decision, stating its belief in "STAAR’s bright future as a standalone public company."
Broadwood had previously criticized the 'window shop' period and the overall integrity of the sales process, asserting that STAAR's board failed to secure the best possible outcome for shareholders. The activist firm believes STAAR's leading technology in the refractive surgery market positions it for substantial long-term growth that was not reflected in Alcon's bid.
Based in Lake Forest, California, STAAR Surgical is an innovator in ophthalmic technology, best known for its implantable Collamer® lenses, such as the EVO Visian ICL, which are used in refractive and cataract surgeries. These lenses offer an alternative to traditional vision correction methods like LASIK.
The collapse of the merger forces STAAR, with a market capitalization of approximately $1.17 billion, to navigate its future independently. The focus now shifts to management's ability to execute on the standalone growth strategy that Broadwood and other dissenting shareholders have championed. Prior to the vote's outcome, Wall Street analysts held a cautious stance, with a consensus hold rating and an average price target of $26.56, suggesting the market was already skeptical of the deal's premium.
With the acquisition premium now erased from the stock price, investors will be closely watching for management's next steps to unlock the standalone value that Broadwood insists exists. This includes capitalizing on its market-leading position and potentially recruiting new executives and board members, an action Broadwood had previously signaled it was prepared to assist with if the merger was defeated.