Staar Surgical will remain independent after a bitter shareholder battle that has raged for the past several months has now ended the attempted buyout of the company by Alcon.
Alcon announced its intention to buy out the struggling lens maker back in August for $1.5 billion as it looked to bolster its portfolio of products aimed at correcting nearsightedness.
Staar’s Evo and Visian implantable collamer lenses offer an alternative to glasses and contacts, as well as LASIK surgery.
The original proposal saw Alcon offer a premium of about 59% over Staar’s average stock price going back three months, amounting to $28 per share in cash.
While Staar’s board wanted the deal, shareholders began to revolt. Broadwood Partners, Staar's biggest shareholder with around a 30% stake, pushed back hard against Alcon's offer, saying it undervalued the business. Broadwood was later followed by Yunqi Capital, which also opposed the deal.
Alcon, reading the room, sweetened its offer in December and said it would purchase all outstanding shares of Staar for $30.75 per share in cash, worth an extra $150 million in equity value for stockholders and making the total equity value of the deal worth about $1.6 billion.
But in a Staar stockholder meeting held Jan. 6, its shareholders rejected the takeover, leading the board to have to formally terminate its deal with Alcon. Several hours later, Alcon too walked away.
Stephen Farrell, CEO of Staar, said in a short release: “The board approved the Alcon agreement because we determined that it was in the best interests of Staar stockholders. 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.”
Shares in Staar fell nearly 7% Tuesday, before edging up almost 1% after-hours.
“Throughout this process we remained disciplined with our views on price and risk,” said David J. Endicott, CEO of Alcon. “Moving forward, our refractive strategy is unchanged and our new wavelight plus offering remains our focus for the most popular refractive surgery in the world, LASIK.”
Alcon shares ended Tuesday up 2.6%.
Besides the M&A saga, Staar has faced declining demand in China and major changes at the top of its organization. Before the buyout deal, Staar’s first-quarter earnings saw net sales drop 45% year over year—down to $42.6 million from $77.4 million—due to a planned reduction of channel inventory in the country. Outside of China, Staar said net sales were up 9% in the quarter.
Farrell was named chief executive last February, replacing Tom Frinzi, alongside the company's move to lay off about 115 employees. The next month saw Staar reorganize its C-suite, with the departures of its chief financial and technology officers.
Staar has also been working to shift its manufacturing base to avoid new China tariffs, including by delivering inventory into the country ahead of the duty date and by planning to ramp up production in Switzerland while slowing its U.S. facilities.
In a note to clients, analysts at ODDO BHF said while the merger “would have been a good addition to Alcon's IOL portfolio in an attractive niche,” they also argued that “the deal would have increased Alcon's net leverage” and limit its potential for “further external, non-dilutive growth.”
“We believe Alcon is on the right track in the IOL market even without the planned acquisition,” the firm concluded.