Staar Surgical Shares Slip After Alcon Refuses To Reconsider Merger Consideration

• Alcon announced in early August that it has entered into a definitive merger agreement with Staar, under which Alcon will acquire all outstanding shares of STAAR common stock for $28 per share in cash.
• Several long-term Staar shareholders have opposed the deal, including Broadwood Partners, Yunqi Capital, and Defender Capital.  
• Staar now intends to hold a special meeting of its shareholders to consider the proposed merger on December 3.
   

Staar Surgical (STAA) shares dropped 3% on Friday afternoon after the company said that it approached Alcon (ALC) to reconsider the merger consideration in its takeover offer, but Alcon refused.

Staar is a manufacturer of phakic intraocular lenses, a vision correction solution that reduces or eliminates the need for glasses or contact lenses. Alcon, an eye care company, announced in early August that it has entered into a definitive merger agreement with STAAR, under which Alcon will acquire all outstanding shares of STAAR common stock for $28 per share in cash. However, several long-term shareholders have opposed the deal, including Broadwood Partners, Yunqi Capital, and Defender Capital.  

Shareholders’ Opposition

Broadwood Partners, L.P., and its affiliates, STAAR’s largest shareholder owning 27.5% of the company’s outstanding common shares, said earlier this month that it intends to call a special meeting of Staar shareholders to remove certain directors in light of its opposition to the proposed acquisition.

“We anticipate that a refreshed Board would consider, among other matters, how to run a full, fair, independent, and open strategic alternatives process to maximize value that is untainted by the process issues and conflicts of interest that afflicted this proposed transaction with Alcon,” Broadwood President Neal C. Bradsher said, while also urging fellow shareholders to vote against the deal with Alcon.

Failed Negotiations

Staar said in the recent filing that starting October 15, Staar management engaged in private discussions with Alcon regarding the path forward in light of shareholder resistance, including an amendment to the terms of the existing merger agreement. Alcon, however, rejected the request to increase the merger consideration, it said.

Staar now intends to hold a special meeting of its shareholders to consider its proposed merger on December 3. Staar initially planned to hold the meeting on October 23, but postponed it after considering the varying views expressed by stockholders and the potential adverse impact on company valuation in the event of a failed stockholder vote.

How Did Stoctwits Users React?

On Stocktwits, retail sentiment around STAA stock fell from ‘neutral’ to ‘bearish’ over the past 24 hours, while message volume stayed at ‘low’ levels.

STAA stock has gained 6% this year but dropped 11% over the past 12 months. 

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