DEFA14A: STAAR Surgical Urges Shareholder Vote for Alcon Merger

STAAR Surgical's Board unanimously recommends the $28.00 per share all-cash merger with Alcon, citing compelling premium and significant standalone risks.

Summary

• STAAR Surgical Company's Board of Directors unanimously recommends stockholders vote FOR the proposed all-cash merger with Alcon Research, LLC for $28.00 per share.
• The proposed merger offers a significant premium: 51% to STAAR's closing stock price on August 4, 2025 ($18.49), 59% to its 90-day volume-weighted average price (VWAP) as of the same date ($18.00), and 47% to the median sell-side analyst price target of $19.00.
• The Board's decision follows over a year of evaluating strategic alternatives, concluding that the merger provides greater value than STAAR could achieve on a standalone basis.
• STAAR faces sustained challenges, including inconsistent financial results, overweight exposure to China (51% of FY24 Net Sales) with slowing growth and macroeconomic headwinds, increasing competition, and a limited product offering.
• The company's Net Sales have declined since 2023, with a projected decline for FY2025 and a reset to a lower long-term growth profile (2% CAGR from 2023 to 2026E Net Sales of $340M).
• STAAR's 2Q25 Net Sales were down 55% year-over-year, and it reported a net loss of $(17) million compared to a net income of $7 million in 2Q24.
• The Board negotiated favorable merger terms, including a 45-day 'window shop' period with a nominal $14.5 million (1%) break-up fee for certain competing proposals, which expired on September 19, 2025, without any competing offers.
• Broadwood Partners, a minority stockholder, opposes the merger, but STAAR's Board asserts Broadwood's claims are flawed and misleading, misrepresenting STAAR's standalone challenges and potential buyer interest.
• Soleus Capital, STAAR's second-largest active stockholder (~6% ownership), supports the merger and intends to vote in favor.

Sentiment

Score: 7

Explanation: The filing presents a strong case for the merger as a highly positive outcome for shareholders, offering a significant premium and mitigating substantial standalone business risks. While the underlying company performance is negative, the proposed transaction provides a clear path to value realization.

Positives

• The $28.00 per share all-cash consideration provides compelling, certain, and immediate cash value to stockholders.
• The offer represents a significant premium: 51% to the unaffected share price, 59% to the 90-day VWAP, and 47% to the median sell-side analyst price target.
• The merger de-risks STAAR from significant standalone challenges, including declining sales, macroeconomic headwinds in China, and intensifying competition.
• Alcon's resources and scale are expected to accelerate the adoption of EVO ICLs by more surgeons and patients worldwide.
• The Board conducted an extensive and thoughtful evaluation of strategic alternatives over more than a year, negotiating favorable terms for stockholders.
• Favorable merger agreement terms include a low break-up fee ($14.5M or 1%) during the 45-day window shop period, no 'naked no vote' fee, and Alcon's commitment to strong remedial actions for regulatory approvals.
• The absence of competing proposals during the window shop period validates the Board's conviction that Alcon's offer was the greatest value achievable.

Negatives

• STAAR's operating and financial results have been inconsistent, leading to stock price declines.
• Net Sales have declined over the last two years (FY23-FY25), with 2Q25 Net Sales down 55% year-over-year and a net loss of $(17) million.
• The company is not expected to be profitable for FY2025.
• STAAR has overweight exposure to China (51% of FY24 Net Sales), where growth has slowed, macroeconomic conditions are weak, and new market entrants are creating greater risks and potential pricing pressure.
• The company has a limited product offering, deriving nearly all Net Sales from EVO and EVO+ ICLs, and has been largely ineffective in diversifying through new product introductions and R&D efforts.
• STAAR has been unable to penetrate the market beyond high myopia patients in the 10+ years since EVO ICL launch, despite low and moderate myopia patient populations being 10x larger.
• The company faces significant competition from large, well-resourced global companies offering numerous treatment options for myopia.
• Management projections signal a significantly lower go-forward growth profile (2% CAGR from 2023 to 2026E Net Sales of $340M) compared to historical rates.
• If the Alcon merger is not approved, STAAR expects its valuation would face considerable downward pressure, and there is no guarantee Alcon would participate in any future sale process.

Risks

• The occurrence of any event, change, or other circumstances that could give rise to the termination of the Alcon merger agreement or cause the consummation of the proposed transaction to be delayed or fail to occur.
• Failure to obtain approval of the proposed transaction from STAAR's stockholders.
• Failure to obtain certain required regulatory approvals or to satisfy any other closing conditions to the completion of the proposed transaction within expected timeframes or at all.
• Disruption of management's attention from STAAR's ongoing business operations due to the proposed transaction.
• The effect of the announcement of the proposed transaction on STAAR's ability to retain and hire key personnel and maintain relationships with customers, suppliers, and others.
• The ability of STAAR to meet expectations regarding the timing and completion of the transaction.
• The outcome of any legal proceedings that may be instituted against STAAR related to the proposed transaction.
• The possibility that STAAR's stock price may decline significantly if the proposed transaction is not consummated.
• Overweight exposure to China, where growth has slowed, macroeconomic conditions are weak, new market entrants, and potential for pricing pressure (e.g., Volume-Based Procurement).
• Mediumand long-term global tariff risk, especially in an unpredictable geopolitical environment, despite short-term mitigation efforts.
• Limited product offering and historical inability to diversify beyond EVO and EVO+ ICLs.
• Inability to penetrate the market beyond high myopia patients, limiting growth opportunities.
• Intensifying competition from large, well-resourced global companies offering numerous treatment options for myopia.
• Risk of creeping control by a single minority stockholder (Broadwood Partners) if the merger fails, potentially dragging on valuation.
• Lengthy and significant disruption to patients, surgeons, employees, distributors, partners, and stockholders if the merger fails.

Future Outlook

Management expects to return to growth in 2026, with projected Net Sales of $340 million, representing a 2% CAGR from 2023. However, this reflects a reset to a significantly lower go-forward growth profile compared to historical levels. The company does not expect to be profitable for FY2025. China procedure volumes for EVO ICLs are essentially flat year-to-date, with softening trends in 2Q25 and no improvement in 3Q25. The merger with Alcon is presented as a way to accelerate EVO ICL adoption and address ongoing business headwinds.

Management Comments

• Stephen Farrell, CEO of STAAR, stated: 'We have talked with many STAAR stockholders and analysts over the past weeks who are supportive of the Alcon merger and recognize the compelling value it provides, which is why we are confident that the majority of our stockholders will vote FOR the Alcon merger.'
• Farrell also noted: 'STAAR is a single product company serving a narrow portion of an increasingly competitive market that has experienced demand challenges for several years in its largest market; STAAR needs a partner like Alcon to broaden its portfolio and better address its rapidly evolving risks.'
• Farrell further commented: 'If the Alcon merger does not move forward, we believe STAAR's valuation will fall substantially, exposing stockholders to significant risk.'

Industry Context

The ophthalmic industry, particularly the refractive surgery market, is characterized by a large total addressable market (TAM) for myopia but a relatively small number of surgical procedures (5.2 million projected globally in 2025). Laser vision correction (LVC) dominates this market, often at a lower cost than ICLs. STAAR operates in a competitive landscape with large, well-resourced global companies like EssilorLuxottica, Johnson & Johnson, and Zeiss. The China market, which accounts for over 50% of STAAR's Net Sales, is experiencing slowing growth, macroeconomic uncertainty, and increasing competition from new local entrants, leading to potential pricing pressure and the risk of Volume-Based Procurement (VBP). STAAR's limited product offering and historical inability to expand beyond high myopia patients further constrain its standalone growth potential within this evolving market.

Comparison to Industry Standards

• The Alcon merger consideration of $28.00 per share represents approximately 2.0x the median premium paid in comparable U.S. cash-only MedTech deals announced since 2015 with deal values above $500 million, indicating a highly favorable premium.
• Broadwood Partners' valuation analysis is flawed as its selected peer set has a median 2024-2027E Net Sales CAGR of 19%, which is approximately three times higher than STAAR's projected 6% CAGR for the same period, making direct comparisons misleading.
• STAAR's projected 2024-2027E Net Sales CAGR of 6% ranks last among Broadwood's peer set (15 out of 15 companies), highlighting its significantly lower growth profile compared to industry benchmarks.
• Unlike Broadwood's peer set, STAAR's management projects a (17%) decline in Net Sales from 2024-2025E, indicating a performance significantly below industry growth standards.

Management Changes

Corporate Governance

Legal Proceedings

• The outcome of any legal proceedings that may be instituted against STAAR related to the proposed transaction is a known risk factor.

Related Party Transactions

• STAAR's Board Chair, Dr. Elizabeth Yeu, had previous consulting arrangements with Alcon, among other companies in the eye care industry. These arrangements were disclosed when she joined the Board and were reviewed by the Board, which determined they did not impair her independence. Her consulting arrangement with Alcon terminated in October 2024.

Stakeholder Impact

• **Shareholders**: Expected to receive compelling, certain, and immediate cash value at a significant premium ($28.00 per share), de-risking their investment from STAAR's standalone challenges. A 'no' vote could lead to significant stock price decline.
• **Employees**: Equity awards will be cashed out in accordance with existing terms, applying equally to all employees, not just executives. This provides liquidity and certainty.
• **Patients and Surgeons**: The merger with Alcon is expected to accelerate the adoption of EVO ICLs, bringing the innovative technology to more patients worldwide due to Alcon's larger resources and scale.
• **Customers, Suppliers, and Partners**: The announcement of the proposed transaction carries a risk of disruption to relationships, operating results, and business generally if the merger fails or is delayed.

Next Steps

• STAAR stockholders are urged to read all relevant documents filed or to be filed with the SEC, including the Proxy Statement, and to vote FOR the Alcon merger proposal on the WHITE proxy card.
• The proposed transaction is subject to obtaining approval from STAAR's stockholders and certain required regulatory approvals.
• Alcon expects the deal to close within 6-12 months from the announcement date (August 5, 2025).

Key Dates

Recommendation

The filing strongly advocates for the Alcon merger, which offers a substantial all-cash premium of $28.00 per share, significantly above STAAR's pre-announcement trading levels. This provides immediate, certain value to shareholders and de-risks the investment from STAAR's documented standalone challenges, including declining sales, profitability issues, and significant market headwinds in China. For an investor, buying STAAR shares below the $28.00 offer price, especially given the market's confidence in the deal closing (as indicated by the narrow spread), represents a compelling arbitrage opportunity to capture the premium and exit a company facing considerable operational difficulties.

Keywords

STAAR Surgical, Alcon, Merger, Acquisition, Proxy Statement, Shareholder Vote, Implantable Collamer Lenses, EVO ICL, Ophthalmic, Vision Correction, Medical Device, China Market, Financial Performance, Risk Factors