Alcon Ag : William Blair Initiates Coverage With Market Perform Rating

Investing.com -- U.S. stock futures slumped lower Tuesday, with U.S. investors returning from a holiday to elevated geopolitical tensions over Greenland after President Donald Trump threatened European allies with trade tariffs.

Here are some of the biggest premarket U.S. stock movers today:

• Netflix (NASDAQ:NFLX) stock rose 1% ahead of the streaming giant’s latest quarterly results after the close, and following news it had submitted an amended all-cash offer for Warner Bros Discovery’s studio and streaming businesses, winning the unanimous support from the HBO owner’s board without increasing the $82.7 billion purchase price.

• 3M Company (NYSE:MMM) stock fell 3.8% despite the industrial giant posting an increase in fourth-quarter profit, driven by its improving profit margins even as sticky inflation weighed on consumer demand. 

• DR Horton (NYSE:DHI) stock rose 2.6% after the homebuilder beat fourth quarter earnings expectations even as it reported lower-than-anticipated net sales orders in its fiscal first quarter, flagging flagged headwinds to property purchasing activity from cautious consumers.

• Bank of America (NYSE:BAC) stock fell 1.4% after the lender announced plans to award about $1 billion in equity to all employees except senior management, following a strong year.  

• RAPT Therapeutics (NASDAQ:RAPT) stock soared over 60% after GSK (NYSE:GSK) agreed to buy the U.S. firm for $2.2 billion, adding global rights to the experimental food allergy drug ozureprubart to its respiratory and immunology portfolio.

• Newmont Goldcorp (NYSE:NEM), Hecla Mining (NYSE:HL) and Endeavour Silver (NYSE:EXK) all rose strongly, with precious metal miners in demand as gold prices soared past $4,700 per ounce for the first time and silver hovered below record highs.

• Applied Digital (NASDAQ:APLD) stock fell 5.6% after CEO and Chairman Wes Cummins sold 165,000 shares of the company’s stock, generating just over $6 million.

• U.S. IT hardware stocks, such as Logitech (NASDAQ:LOGI) and NetApp (NASDAQ:NTAP), fell sharply after Morgan Stanley downgraded its view on the industry, warning that companies could drastically reduce their spending budgets as enterprise demand slows and component costs rise, cutting the two companies to "underweight" from "equal-weight".

• Alcon (NYSE:ALC) stock fell 0.9% despite Deutsche Bank upgrading its stance on the medical device company to “buy” from “hold”, citing expectations of stronger growth and margin expansion. 

Investing.com -- The monthslong tug-of-war for the future of STAAR Surgical Company (NASDAQ:STAA) ended Tuesday with a white flag. After four shareholder meeting postponements and a bitter proxy battle, the implantable lensmaker announced its intention to terminate its merger agreement with Swiss eye care giant Alcon AG (NYSE:ALC) after failing to secure enough shareholder support.

The collapse comes despite aggressive last-minute efforts by Alcon and STAAR leadership to entice a skeptical investor base. Over the last quarter, the companies increased the bid to $30.75 per share, initiated a "go-shop" period to solicit rival offers, and modified controversial executive "golden parachute" packages.

Ultimately, these concessions failed to overcome an opposition campaign led by Broadwood Partners. According to a source familiar with the matter, support for the deal stalled at roughly 30% of outstanding shares as voting concluded, relatively unchanged from voting totals Investing.com reported in mid-December, and well short of the majority required.

The market reaction was swift and punishing. STAAR shares plummeted over 12% in early trading, falling from $23.94 to $21.00. The decline reflects the realization of share price risk that analysts, proxy advisors, and STAAR itself had predicted if the merger fell through; however, the stock had already been trading at a steep discount to Alcon’s offer price, a signal that the market never fully bought into the deal’s success.

With the deal dead, the focus shifts to where STAAR’s "floor" sits as a standalone company. BTIG analyst Ryan Zimmerman warned that the downside could be deeper than current levels.

"Many investors have asked us where STAA shares settle out following this episode," Zimmerman noted. While shares opened at approximately 2.5x Next Twelve Months (NTM) EV/Sales, he suggested a level of 2x, or a price range of $15 to $18, is more appropriate, especially if Alcon pivots to acquire a competitor. “We think that would be a significant negative for STAA if it happens, and we do not believe ALC is opposed to that,” Zimmerman said.

The defeat of the merger is a victory for Broadwood Partners and its founder, Neal Bradsher. Broadwood, which owns 30.2% of the company with a stake built up over three decades, consistently argued against the merger’s timing, process, and $1.6 billion valuation, citing STAAR’s long-term potential in the refractive surgery market.

Instead of gloating about a successful campaign, Broadwood struck a collaborative tone, and STAAR followed suit.

“It is now time to focus on the road ahead. With its leading technology, strong financial position, privileged position in large markets, and clear path to growth and profit margin expansion in both the near term and the long term, STAAR’s future is bright,” said Bradsher on Tuesday. He added, “We are ready and willing to work collaboratively with the Board and our fellow shareholders to implement the necessary changes to enable effective oversight and execution on STAAR’s opportunity.”

“We respect the outcome of the vote and look forward to working collaboratively with shareholders to ensure the best possible outcome for STAAR as a stand-alone company,” said STAAR CEO Stephen Farrell.

Broadwood had previously announced it was working to call a special meeting to oust the three directors it deems most responsible for the sale process: Farrell, Chair Elizabeth Yeu, and Compensation Committee Chair Arthur Butcher.

While Broadwood did not explicitly state Tuesday that it would continue with its plan, Zimmerman indicated the fight probably isn’t over. “While specifics of this meeting have yet to be determined, we think it will only be a matter of time before this takes place with some management changes to follow,” he wrote in BTIG’s Tuesday note.

Investing.com -- Amid a highly contentious merger process marked by rampant opposition, the deciding shareholder meeting in STAAR Surgical’s (NASDAQ:STAA) $1.6 billion sale to Alcon AG (NYSE:ALC) has been postponed for a fourth time as the companies fail to win shareholder support.

Investing.com previously reported that only 18% of outstanding shares had voted for the deal ahead of the initial October 23 shareholder meeting. In response to the lack of support, the companies recently introduced several amendments designed to sweeten the pot: highly criticized executive pay packages were adjusted, a "go-shop" process was conducted, and Alcon raised its bid from $28.00 to $30.75 per share.

The sweeteners were seemingly unable to entice investors. Ahead of Friday’s shareholder meeting, a little over 30% of outstanding shares voted in favor, a source familiar with the matter told Investing.com, a sign that the deal is still struggling to garner the necessary support.

In turn, Alcon exercised its right to adjourn until January 6th.

The market’s reaction reflects this ongoing uncertainty. While STAAR’s stock rose 4.6% on Friday, up 4.2% on the week, a significant gap remains. With the stock still trading more than $5.50 below the $30.75 offer price, arbitrage traders are signaling a cautious stance, pricing in a high probability that the deal may ultimately collapse.

Broadwood Partners, a 30.2% shareholder which has built up its stake over three decades, has been the main driver of opposition to the merger. The firm has consistently highlighted criticisms of the deal on grounds of valuation, timing, and process.

On Wednesday, Broadwood Founder Neal Bradsher argued that internal financial models show a “clear path to a $50 per share stock price next year.” He cited an inevitable recovery in the global refractive market as a catalyst for standalone growth.

Following Friday’s adjournment, Bradsher issued a scathing response, characterizing the fourth delay as a desperate tactic: “STAAR has had more than four months to justify its ill-advised sale to Alcon. The Company and its would-be acquirer have sought to apply lipstick to this pig of a deal… Another few weeks of advocacy and solicitation will not cure the defects of the deal.” Bradsher said.

Bradsher noted that the opposition is not limited to Broadwood, pointing out that several large shareholders, three proxy advisory firms, and at least one of the company’s own directors remain skeptical. Yunqi Capital and Defender Capital, 5.1% and 1.5% shareholders, respectively, have been highly critical of the deal. All three major proxy advisors, ISS, Glass Lewis, and Egan-Jones, have issued blistering reports, with Glass Lewis and Egan-Jones reaffirming their recommendation against the deal following the amendments. In STAAR’s proxy materials, it is revealed that one board member was against the amendments.

“Ultimately, the Board cannot avoid shareholder input forever,” Bradsher concluded. “We urge shareholders to stand firm and vote ‘AGAINST’ the proposed transaction, and we encourage the Board and Alcon to accept the outcome with humility.”

For its part, STAAR has advocated for the merger by highlighting ongoing struggles in the Chinese market. The company argues that Alcon’s offer, a 74% premium to STAAR’s 90-day Volume Weighted Average Price (VWAP), provides certain liquidity now, as opposed to the risk and uncertainty of remaining a standalone entity.

Additionally, several sell-side analysts have endorsed the deal. In a December 9 note, BTIG analysts warned that STAAR’s stock is “likely to meaningfully suffer if the deal is not consummated.” Addressing the recent amendments, Canaccord Genuity noted on December 9, “We believe that these changes will likely satisfy shareholders.”

The eyes of the market now turn to January 6th. If Alcon and the STAAR Board cannot bridge the 20-point gap in shareholder support over the holiday break, the merger, and the future leadership of the company, may be headed for a significant reckoning.

Broadwood Partners declined to comment to Investing.com on the matter. STAAR Surgical has yet to respond to Investing.com’s request for comment.