Investing.com -- The high-stakes standoff over the $1.6 billion acquisition of STAAR Surgical Company (NASDAQ:STAA) by Alcon AG (NYSE:ALC) continued heightening Friday. Leading proxy advisory firm Glass Lewis reaffirmed its recommendation that shareholders reject the deal, as STAAR management and its largest shareholder, activist firm Broadwood Partners, engaged in an increasingly personal war of words.
With the final shareholder vote looming on December 19, the battle has devolved into a series of harsh counter-attacks. The outcome now rests on whether investors believe management’s claim of "certain value" or the activists’ narrative of a "misgotten" and "irredeemably flawed" process.
A Deal Under Siege: 72% Opposition and Three Postponements
The merger has been seemingly fraught since its inception. Broadwood, which controls a 30.2% stake, has led a campaign that seemed poise to overturn the deal earlier this year. Investing.com previously reported that roughly 72% of shares voted against the transaction ahead of an initial shareholder meeting that has now been postponed three times.
In an effort to salvage the deal, the board amended the agreement twice:
-
The "Go-Shop" Provision: A 30-day window to solicit superior offers, which recently expired without a new bidder, despite outreach to 21 different third parties.
-
The Price Bump: Earlier this week, Alcon raised its bid from $28.00 to $30.75 per share, representing a 74% premium to the 90-day VWAP.
Despite these concessions, Broadwood and Yunqi Capital, a 5.1% holder, remain vehemently opposed, arguing the deal fundamentally undervalues the implantable lens maker.
Glass Lewis: Board Credibility is "Remarkably Threadbare"
In a reaffirmation of its "AGAINST" recommendation, Glass Lewis argued Friday that the revised offer does not provide persuasive cause for investors to endorse the deal.
-
A "Performative" Process: Glass Lewis contended that every step of the follow-on process was overseen by a board whose procedural credibility is "remarkably threadbare." It characterized the "go-shop" as ineffective in establishing a competitive auction.
-
Structural Advantages for Alcon: The advisor noted that while potential suitors were asked to sign NDAs with multi-year standstills, Alcon’s original NDA explicitly excluded such provisions. Furthermore, any go-shop participant faced a "procedural deterrent": Alcon’s four-day right to match any topping bid.
-
Valuation Disconnect: Updated for December 2025 estimates, the $30.75 bid implies an NTM revenue multiple of 4.6x. Glass Lewis pointed out that this continues to track well below the company’s unaffected three-year and five-year standalone multiples of 5.6x and 10.7x, respectively.
-
Lack of Unanimity: The advisor highlighted that not all board members agreed to the latest delay or the revised terms, validating Broadwood’s claim that the board is divided on the deal’s merits.
Rebutting Ideas of the Bidders
While Broadwood has accused STAAR of "running the clock" and "thwarting" superior offers, a source familiar with STAAR’s perspective has pushed back with rebuttals regarding three specific parties, termed A, B, and C in STAAR’s proxy materials.
Broadwood has criticized STAAR for its treatment of the three parties in its campaign. Additionally, the shareholder has pointed to a "credible buyer" that Broadwood says STAAR tried to "ward off." STAAR on Thursday said it believed the "credible buyer" to be FountainVest.
The Suitor Breakdown:
-
Parties A & B: Broadwood claims these parties were not invited to submit proposals until hours before the original merger was signed. STAAR’s records show the CEO received only "introductory outreach" two days prior to the Alcon deal. Despite an invitation to submit proposals within 24 hours, neither party engaged. During the "go-shop," both parties confirmed they had no interest in evaluating a transaction. A source familiar with STAAR’s perspective believes proxy advisor ISS should consider if interest from these parties was genuine or not, since neither engaged in the sale process before the deal was signed or during the go-shop period.
-
Party C: A privately-owned company that emailed in April 2025. STAAR states the company later confirmed the outreach was "not intended as a proposal." When contacted by Citi during the go-shop, Party C again reconfirmed it had no interest. The source believes ISS should consider this party’s intentions as well, since it did not attempt to engage.
-
The FountainVest Timeline: Broadwood blasted STAAR for demanding a multi-year standstill from a "well-capitalized firm," which STAAR believes is FountainVest. STAAR’s timeline shows FountainVest waited until Day 21 of the 30-day window to reach out and five days to return an NDA markup. STAAR accepted the removal of the standstill within 24 hours, yet FountainVest still declined to execute the NDA.
The China Macro Debate
A primary point of contention remains the China market, STAAR’s largest revenue driver. Broadwood and Yunqi claim the market is "turning the corner" with double-digit demand growth, making this the worst possible time to sell.
The source familiar indicated that STAAR, however, sees recent earnings from Carl Zeiss Meditec as a reality check. The $5 billion ophthalmic peer recently saw its stock drop 7% after reporting:
-
Refractive procedures in China are remaining "largely flat."
-
The overall consumer climate remains "rather weak."
-
Risks are increasing due to local competition and tighter regulatory frameworks.
STAAR argues that Broadwood’s claims of a robust recovery are "false and misleading," and that the $30.75 cash offer protects shareholders from this volatility. In an emailed statement made to Investing.com, the company said, "We stand by the comprehensive sales process overseen by a Board committed to maximizing value for STAAR stockholders. Since the initial announcement of the Alcon merger agreement, Broadwood has distorted the truth and worked at every turn to derail the transaction to serve its own interests."
Additionally, STAAR stated that it "believes its stockholders will be harmed if this transaction is not approved and that the value of STAAR will be significantly less. STAAR stockholders have a choice: $30.75 in cash from Alcon or allow Broadwood to obtain even greater influence without paying any premium to other stockholders.”
The Final Word
The conflict has now reached a binary choice for investors. STAAR CEO Stephen Farrell warned that the activist is attempting to "derail the process" to serve its own ends, while Broadwood President Neal Bradsher categorized management’s latest moves as "wild and false accusations in service of their misbegotten, but favored, deal."
As the December 19 vote nears, the eyes of the market are on ISS. Their updated recommendation will likely determine whether Alcon secures its prize or if Broadwood’s campaign for a standalone STAAR prevails.
