STAAR draws no rival bids as Yunqi joins Broadwood against Alcon deal

Investing.com -- STAAR Surgical Company (NASDAQ:STAA) announced today that its 45-day “window shop” period under the proposed $28-per-share sale to Alcon AG (NYSE:ALC) has expired Friday without any competing bids, reinforcing its view that the merger maximizes shareholder value. But opposition to the deal hardened Monday as Hong Kong–based Yunqi Capital became the second major holder to announce plans to vote against the transaction, aligning with STAAR’s largest shareholder, Broadwood Partners.

The Lake Forest, California-based maker of EVO implantable lenses stressed that despite months of speculation and Broadwood’s “active exploration” of alternatives, no credible rival bidder emerged. The company noted that takeover chatter began in July 2024 and that it negotiated a “window shop” clause allowing it to consider superior proposals for only a 1% termination fee. After Friday, that fee rose to 3%.

“The expiration of the ‘window shop’ period with no competing acquisition proposal reinforces the Board’s conclusion that the Alcon merger maximizes value for STAAR stockholders,” CEO Stephen Farrell said. STAAR added that stockholders would be exposed to “significant value destruction” if the merger were rejected, citing its $18.49 share price before the deal announcement and continued business headwinds in the third quarter.

A person familiar with the company’s thinking told Investing.com the latest release effectively “debunked” Yunqi’s criticisms and showed the company had given the market ample time to produce a higher bid. “There’s no other deal out there,” the person said, noting STAAR has effectively been on the block for 13 months and yet “the market has a fundamentally different value on the company.”

Yunqi Capital, which owns about 5.1% of STAAR, issued an open letter Monday arguing the Alcon bid “materially undervalues” the company and reflects a flawed process. Like Broadwood, which holds roughly 27% of STAAR, Yunqi said the board limited its outreach and relied on an unduly bleak view of STAAR’s prospects in China.

“We would not necessarily be opposed to a merger at an appropriate price or on other appropriate terms,” Yunqi wrote. “But the proposed sale at the current proposed terms materially undervalues the Company and does not reflect the Company’s intrinsic value.”

Yunqi also cited improving Chinese macro indicators and inventory normalization trends at STAAR’s distributors as evidence the company can rebound as a standalone business.

STAAR has countered that narrative by emphasizing saturation in its key markets and the difficulty of penetrating the U.S. refractive surgery segment. According to the person familiar with the matter, Broadwood and Yunqi have an “inaccurate read of the situation” in China, overstating the size and growth rate of the remaining opportunity there. “It’s a smaller and slower-growing pool,” the person said, adding STAAR has already captured much of the addressable market.

Story Continues

Alcon’s $28-per-share all-cash offer represents a 51% premium to STAAR’s pre-announcement price and a 59% premium to its 90-day average, but still sits well below Alcon’s initial $55 approach in 2024. Broadwood and Yunqi argue the gap underscores the board’s failure to extract fair value, while STAAR points to its declining fundamentals and argues that the premium is compelling and certain.

Shareholders will vote on the deal later this fall. With STAAR’s two largest outside holders now publicly opposed, the vote is shaping up as a referendum on the company’s future, and on whether the market believes STAAR can deliver more value independently than by taking Alcon’s cash today.

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