DEFM14A: STAAR Surgical to Merge with Alcon for $28/Share Cash

STAAR Surgical Company's Board unanimously recommends stockholders approve a $28.00 per share all-cash merger with Alcon, representing a significant premium.

Summary

• STAAR Surgical Company (STAAR) will merge with Rascasse Merger Sub, Inc., a wholly-owned subsidiary of Alcon Research, LLC (Alcon), with STAAR becoming a wholly-owned subsidiary of Alcon.
• STAAR stockholders will receive $28.00 in cash for each share of STAAR common stock held immediately prior to the merger, without interest and subject to applicable tax withholding.
• The transaction price represents an approximately 59% premium to the 90-day volume weighted average price of STAAR common stock on August 4, 2025, and an approximately 51% premium to its closing price on the same date.
• The STAAR Board of Directors has unanimously approved the Merger Agreement and recommends that STAAR stockholders vote in favor of adopting the Merger Agreement and the Compensation Proposal.
• A special meeting of stockholders is scheduled for October 23, 2025, to vote on the Merger Proposal and an advisory (nonbinding) Compensation Proposal.
• Following the merger, STAAR common stock will be delisted from NASDAQ and will cease to be a publicly traded company.
• Outstanding equity awards (In-the-Money STAAR Options, STAAR RSU Awards, STAAR PSU Awards, STAAR Cash Awards) will be converted into cash payments or Alcon restricted stock units, with performance-vesting awards (PSUs) deemed achieved at 160% of the target level.
• The merger is contingent on approval by a majority of outstanding STAAR common stock and regulatory clearances in multiple jurisdictions, including the U.S. (HSR Act), China, and Japan.
• Broadwood Partners, L.P., holding approximately 27.3% of STAAR's outstanding shares, has indicated its intent to vote against the Merger Proposal and has filed a preliminary proxy statement in opposition.

Sentiment

Score: 7

Explanation: The merger offers a substantial premium and certainty of cash value to shareholders, which is positive given the company's recent financial challenges and market uncertainties, particularly in China. However, the offer is lower than previous Alcon proposals, and a major shareholder is opposing it, introducing some uncertainty. The board's unanimous recommendation and financial advisor's fairness opinion support the deal.

Positives

• The merger offers a significant premium of approximately 59% over the 90-day volume weighted average price and 51% over the closing price of STAAR common stock on August 4, 2025.
• The all-cash consideration provides STAAR stockholders with certainty of value and immediate liquidity upon closing, mitigating market risks and uncertainties associated with STAAR's standalone business plan.
• The Merger Agreement is not conditioned upon Alcon obtaining financing, and Alcon has represented that it has immediately available funds to complete the transaction.
• Alcon has committed to using reasonable best efforts to obtain all necessary regulatory approvals, including potentially taking Remedy Actions (subject to certain limitations), which enhances deal certainty.
• STAAR is entitled to a Parent Termination Fee of $72,375,000 if the Merger Agreement is terminated under certain circumstances related to regulatory approval failures.
• The STAAR Termination Fee, payable if STAAR terminates for a superior offer, is considered relatively favorable at $43,425,000 (approximately 3.0% of implied equity value), and is reduced to $14,475,000 (approximately 1.0% of implied equity value) if a superior offer emerges during the 45-day window shop period.
• The Board retains the right to withdraw its recommendation or terminate the agreement to accept a Superior Offer, subject to specific conditions and negotiation opportunities with Alcon.
• The merger is expected to provide STAAR, as a subsidiary of Alcon, with access to Alcon Inc.'s size, capital, and operational experience, potentially benefiting product reach to more surgeons and patients.
• Appraisal rights are available to eligible STAAR stockholders under Delaware law, allowing them to seek a court determination of fair value for their shares.

Negatives

• STAAR stockholders will not have any ongoing equity participation in STAAR's business or benefit from any future earnings or growth if the merger is completed.
• The $28.00 per share offer is lower than Alcon's previous non-binding offers of $58.00 (April 2024) and $55.00 plus a contingent value right of up to $7.00 (October 2024).
• Broadwood Partners, L.P., a significant stockholder with 27.3% beneficial ownership, intends to vote against the Merger Proposal, which could jeopardize the required stockholder approval.
• A proxy contest initiated by Broadwood Group will cause STAAR to incur additional solicitation and other costs and may impair the ability to obtain the necessary votes.
• The company faces risks related to global macroeconomic conditions, particularly in China, including uncertainty regarding recovery in refractive procedure volumes, potential sustained weakness in demand, and possible pricing controls.
• Restrictions in the Merger Agreement on STAAR's ability to conduct its business in the ordinary course during the pre-closing period may hinder its ability to pursue certain business opportunities or respond to competitive pressures.
• If the merger is not completed, STAAR's share price may decline significantly, and the company will have incurred substantial transaction costs with little or no benefit.
• The exchange of STAAR common stock for cash in the merger will be a taxable transaction for U.S. federal income tax purposes.
• STAAR's executive officers and directors have certain interests in the merger (e.g., accelerated equity vesting, severance) that are different from, or in addition to, the interests of general stockholders.

Risks

• Uncertainty about the effect of the Merger on STAAR's employees, distributors, customers, and other parties, regardless of whether the Merger is completed.
• Impairment of STAAR's ability to attract, retain, and motivate employees, including key personnel, due to the merger's announcement and pendency.
• Diversion of significant management time and resources toward the completion of the Merger.
• Difficulties maintaining relationships with distributors, customers, suppliers, and other business partners.
• Delays or deferments of certain business decisions by STAAR's distributors, customers, suppliers, and other business partners.
• Inability to pursue alternative business opportunities or make appropriate changes to STAAR's business because the Merger Agreement requires STAAR to operate in the ordinary course.
• Litigation relating to the Merger and the costs related thereto, which could prevent or delay completion or result in damages.
• Failure to obtain the required stockholder approval or certain regulatory approvals, or failure to satisfy any other closing conditions on a timely basis or at all.
• Governmental entities may impose requirements, limitations, or costs, or place restrictions on the conduct of STAAR's or Alcon's business as a condition to approval.
• No assurance that a challenge to the Merger on antitrust or foreign investment grounds will not be made or, if made, that it would not be successful.
• A failed transaction may result in negative publicity and a negative impression of STAAR among its customers or in the investment community.
• The share price of STAAR common stock may decline significantly if the Merger is not consummated, especially if the current market price reflects an assumption of completion.
• Incurrence of significant costs, expenses, and fees for professional services and other transaction costs in connection with the Merger, even if it is not completed.
• The Merger Agreement contains non-solicitation provisions and termination fees that could discourage potential competing acquirors.
• If the Merger is consummated, STAAR stockholders will not be able to participate in any further upside to STAAR's business.
• Risk that STAAR may not be able to achieve projected financial performance, including the performance contemplated by the Projections.
• Risks associated with global macroeconomic conditions, including the potential impact on demand for the company's cash-pay premium lenses.
• Risks associated with the company's high concentration of business in China, including uncertainty regarding recovery in refractive procedural volumes, sustained weakness of demand, inventory impact, gross margin, profitability, and potential for pricing controls.
• Risks associated with the company's standalone growth strategy of increasing sales for lower diopter refractive vision correction and expansion in geographies outside of China and Japan.
• Risks associated with the potential adoption or increase of tariffs, including relating to STAAR's expansion of its manufacturing facility in Switzerland.
• Risks associated with competition from new and existing market participants, including lower-cost manufacturers, competitors offering both LASIK and phakic lenses, and competitors with greater financial and operating capabilities.
• Risks related to the company's research and development pipeline and roadmap, and the limited number of new product introductions in the near-term.
• The fact that STAAR's common stock traded at a price higher than the per share Merger Consideration of $28.00 as recently as December 3, 2024.
• The possibility that the price of STAAR's common stock has not yet reflected all of the potential benefits and value to be derived from STAAR's strategic initiatives.
• STAAR's remedies in the event of a breach by Alcon or Merger Sub may be limited to the Alcon Termination Fee, which may be inadequate to compensate STAAR and its stockholders for damages.

Future Outlook

STAAR's management prepared financial projections for fiscal years 2025 through 2030, assuming an annual net sales growth rate of approximately 10% beginning in 2027. These projections incorporate risk-adjusted expectations for ICL sales and new product introductions, considering emerging competition in China and overall future financial results. However, STAAR had previously withdrawn its financial guidance for fiscal year 2025 due to economic uncertainty and tariff policies, making future forecasts challenging.

Management Comments

• Mr. Frinzi (former CEO) indicated to Mr. Endicott (Alcon CEO) that STAAR was focused on its standalone business plan but would bring any acquisition proposal to the Board.
• Mr. Frinzi conveyed the Board's decision regarding Alcon's initial April 2024 offer, stating STAAR would continue to pursue its standalone business plan.
• Mr. Endicott told Mr. Frinzi that Alcon's proposed valuation was lower than the April 2024 offer, now $55.00 cash plus a contingent value right up to $7.00.
• Mr. Endicott indicated in January 2025 that Alcon was no longer interested in pursuing an acquisition of STAAR due to concerns regarding the macroeconomic climate in China, ICL sales, inventory levels, and growth rate.
• Mr. Farrell (new CEO) reported on his introductory meeting with Mr. Endicott, where Mr. Endicott expressed renewed interest in a potential transaction.
• Mr. Endicott indicated Alcon was interested in acquiring all outstanding shares and expected a prompt response, noting similar deals had 25-30% premium but recognized STAAR would expect higher.
• Mr. Farrell informed Mr. Endicott that the Board required a purchase price of at least $29.00 per share.
• Mr. Endicott indicated Alcon was unwilling to proceed at $29.00 but would offer $28.00 per share, subject to diligence.
• Mr. Farrell advised Mr. Endicott that the Board had agreed to move forward with due diligence at $28.00 per share, provided definitive documentation reflected acceptable terms.
• Mr. Endicott indicated a willingness to resolve open items in the merger agreement but noted Alcon was unwilling to increase the offer price above $28.00 per share.
• Dr. Yeu (Board Chair) disclosed her past consulting relationship with Alcon and its termination, and the Board determined this did not impair her independent business judgment.

Industry Context

STAAR Surgical is a global leader in implantable phakic intraocular lenses (ICLs), a specialized segment of the eye care industry. Alcon is a broader global leader in eye care, offering a wide range of surgical and vision care products. This merger represents a strategic consolidation, combining STAAR's innovative ICL technology with Alcon's extensive market reach, resources, and operational scale. The industry is currently navigating macroeconomic headwinds, particularly in the Chinese market, which has impacted refractive procedure volumes and STAAR's sales growth. Competition from lower-cost manufacturers and companies offering both LASIK and phakic lenses, along with potential tariff risks and pricing controls in key markets like China, are significant industry challenges that this merger aims to address by integrating STAAR into a larger, more diversified entity.

Comparison to Industry Standards

• The $28.00 per share offer represents a 51% premium to STAAR's closing price on August 4, 2025, and a 59% premium to its 90-day volume weighted average price. This is significantly higher than the 25% to 30% premium noted by Alcon's CEO for similar deals.
• Citigroup Global Markets Inc.'s (Citi) selected public companies analysis, which included SI-BONE, Inc., AtriCure, Inc., Carl Zeiss Meditec AG, Tandem Diabetes Care, Inc., and RxSight, Inc., indicated an illustrative EV / 2026E Revenue multiple reference range of 1.9x to 3.1x. This analysis yielded an implied per share equity value range for STAAR of $16.35 to $23.80, which is below the $28.00 merger consideration.
• Citi's selected precedent transactions analysis, which included Alcon Inc.'s acquisition of LENSAR, Inc., Boston Scientific Corporation's acquisition of Silk Road Medical, Inc., Abbott Laboratories' acquisition of Cardiovascular Systems, Inc., STERIS plc's acquisition of Cantel Medical Corp., Koninklijke Philips N.V.'s acquisition of BioTelemetry, Inc., Stryker Corporation's acquisition of Wright Medical Group N.V., and Stryker Corporation's acquisition of K2M Group Holdings, Inc., showed an overall EV / LTM Revenue multiple range of 3.1x to 6.3x. This analysis indicated an implied per share equity value range for STAAR of $17.15 to $30.80, with the $28.00 offer falling within the upper end of this range.
• Discounted equity research analyst one-year forward price targets for STAAR common stock ranged from $11.75 to $24.40 (discounted at 14.0%), with the $28.00 offer exceeding most of these targets.
• The median one-day unaffected stock price premium paid for selected U.S. target public companies in cash acquisition transactions over $500 million since January 1, 2015, was 26%. The 51% premium offered for STAAR is substantially higher than this industry median.

Management Changes

Corporate Governance

Legal Proceedings

• An individual lawsuit, Carter v. STAAR Surgical Company et al., 8:25-cv-01993, was filed on September 5, 2025, in the United States District Court for the Central District of California.
• The lawsuit alleges that the preliminary proxy statement filed on August 29, 2025, misrepresents and/or omits certain purportedly material information, asserting violations of Sections 14(a) and 20(a) of the Exchange Act and Rule 14a-9.
• The plaintiff seeks an injunction enjoining the consummation of the Merger, rescission or rescissory damages if the Merger is consummated, direction for a revised proxy statement, and costs including attorneys' and experts' fees.
• Several purported stockholders have sent demand letters alleging similar disclosure deficiencies.
• STAAR believes these matters are without merit and cannot predict their outcomes.

Related Party Transactions

• Dr. Elizabeth Yeu, who serves as Board Chair, previously served as an outside consultant to Alcon, receiving fees not exceeding $90,000 per year in the last 7 years. Her consulting arrangement with Alcon terminated in October 2024. The Board determined that this past relationship did not impair her ability to exercise independent business judgment in evaluating the potential transaction.
• Citigroup Global Markets Inc. (Citi), STAAR's financial advisor, has provided and expects to provide investment banking, commercial banking, and other financial services to Alcon Inc. (Alcon's ultimate parent) and its affiliates, unrelated to the Merger. Citi and its affiliates received approximately $0.1 million for investment banking services and approximately $4.5 million for other financial services from Alcon Inc. and/or its affiliates during the two-year period prior to the date of Citi's opinion.

Stakeholder Impact

• **Shareholders**: Will receive $28.00 per share in cash, providing a significant premium and immediate liquidity. They will cease to have equity ownership in STAAR and will not participate in any future upside of the company. Appraisal rights are available for eligible shareholders.
• **Employees**: Continuing employees will receive comparable base salary/wages and target annual cash bonus opportunities, and substantially comparable employee benefits (excluding certain types) for one year post-closing. They will receive credit for prior service for vesting and eligibility in new Alcon plans. STAAR's 401(k) plan is expected to be terminated, with rollover options to Alcon's plan. There is a risk of disruption and potential difficulty in retaining key personnel.
• **Customers, Distributors, and Suppliers**: The announcement and pendency of the merger could adversely impact existing and prospective business relationships, potentially leading to delays or deferments of business decisions.
• **Management and Directors**: Executive officers and directors have interests in the merger that are different from general stockholders, including accelerated vesting of equity awards, severance payments (for executive officers upon qualifying termination), and ongoing indemnification and D&O insurance coverage for six years post-merger. Potential tax gross-up payments are also anticipated for named executive officers.
• **Regulatory Bodies**: The merger requires approval from various antitrust and regulatory authorities in multiple jurisdictions, which could lead to conditions, limitations, or even prohibition of the transaction.

Next Steps

• Hold a special meeting of stockholders on October 23, 2025, to vote on the Merger Proposal and the advisory Compensation Proposal.
• Obtain all required regulatory approvals, including the expiration or termination of the HSR Act waiting period and antitrust clearances in China, Japan, Turkey, United Kingdom, Spain, Portugal, Australia, Kingdom of Saudi Arabia, and Austria.
• If the Merger is approved and consummated, STAAR common stock will be delisted from NASDAQ and deregistered under the Exchange Act.
• The Exchange Agent will send letters of transmittal and instructions to stockholders for exchanging their shares for the Merger Consideration after the Effective Time.
• STAAR's 401(k) plan is expected to be terminated, with continuing employees eligible to participate in Alcon's 401(k) plan and roll over their account balances.

Key Dates

Recommendation

The offer price of $28.00 per share represents a substantial premium (51% to the last closing price before announcement and 59% to the 90-day VWAP), offering immediate and certain cash value to shareholders. This is particularly attractive given STAAR's recent financial challenges, macroeconomic headwinds in China, and the inherent risks of its standalone business plan, including competitive threats and limited near-term new product introductions. While a major shareholder opposes the deal, the Board's unanimous recommendation and the financial advisor's fairness opinion, coupled with the high premium relative to market and analyst targets, suggest a favorable outcome for shareholders. The cash consideration provides a clear exit at a strong valuation, de-risking future uncertainties.

Keywords

STAAR Surgical, Alcon, Merger, Acquisition, Ophthalmology, Implantable Collamer Lenses, ICL, Vision Correction, Medical Devices, SEC Filing, Proxy Statement, Corporate Action, Stockholder Vote, Cash Offer, Premium, Regulatory Approval, Antitrust, Shareholder Activism, Broadwood Partners, Delisting, Deregistration, Financial Analysis, Corporate Governance, Risk Factors