Exclusive: Shareholder revolt threatens Alcon's takeover of STAAR Surgical

Investing.com -- The pending sale of STAAR Surgical Company (NASDAQ: STAA) to Alcon Inc. (NYSE: ALC) has taken an unusual turn. In April 2024, the implantable lens maker rejected a $58-per-share takeover bid from Alcon. Months later, the companies were discussing a slightly lower $55-per-share offer with a $7 contingent value right (CVR), which Alcon later withdrew. After a year of collapsing sales in China and a battered share price, STAAR agreed to merge into Alcon for just $28 per share, nearly half of its earlier valuation. This has prompted investors to ask serious questions and seek honest answers.

Broadwood Pushes Back

Last Tuesday, September 2, Broadwood Partners, STAAR’s largest shareholder with a 27.3% stake built over a 30-year period, came out swinging against the deal. In a press release laced with frustration, the hedge fund accused STAAR’s board of running an inadequate sale process with no “meaningful market check” and urged fellow shareholders to vote against the deal.

The fight may not be over. In STAAR’s proxy filing, the company disclosed that a female board member had been approached by two unnamed parties, called Party A and Party B, shortly before the deal was signed. The parties were described as “a private equity firm with economic interests in a portfolio company in China” and a “healthcare investment platform.” Both engaged in preliminary talks with CEO Stephen Farrell on August 3, but STAAR claims neither outreach included valuation or financing terms. The board gave them just one day to submit an offer before signing the Alcon agreement on August 4.

A person familiar with the matter told Investing.com that several additional parties have expressed interest since Broadwood’s press release, raising the possibility of a rival bid as STAAR’s “window-shop” period is set to expire on September 19.

The “window-shop” period ending doesn’t mean STAAR can’t accept another offer that comes to the table, but it is subject to nearly quadruple the fees payable to Alcon if it does so.

A Compressed Timeline and a Narrow Process

Adding to the controversy is the fact that STAAR’s financial advisor, Citigroup, did not conduct a formal market solicitation or auction process. According to the company’s proxy filing, Citi’s engagement was limited to providing a fairness opinion and advising on Alcon’s offer terms, not canvassing strategic or financial buyers for competing bids. The only outreach to potential alternative suitors came from Farrell, who held brief preliminary talks with the two unnamed parties.

This compressed timeline and absence of a broad market check raise questions about whether shareholders were given the chance to realize full value through a competitive sale process. Broadwood argues that the board’s rushed timeline prevented Party A and Party B from mounting a real challenge, potentially costing shareholders acquisition value.

More importantly, the hedge fund believes Alcon is trying to acquire STAAR ahead of imminent clinical trial results comparing Staar’s EVO ICL to LASIK performed with Alcon’s laser. Favorable data could materially boost Staar’s valuation.

Broadwood also pointed out that Alcon secured terms with STAAR just before the release of second-quarter results showing “progress by STAAR in reducing its cost structure and resolving the temporary challenges that resulted in the sharp decline in its stock price in late 2024 and early 2025.” The hedge fund suggested that Alcon “swooped in at a low price when STAAR was well along in fixing the problems that we believe had caused Alcon to back away from its previous offer at a much higher price.”

With its large stake, Broadwood is well-positioned to block the merger at the shareholder meeting, but it will need support from other stakeholders, such as Soleus Capital (5.2% stake) and Armistice Capital (5.7% stake), which round out the top five shareholders alongside BlackRock and Vanguard. Investing.com reached out to both Armistice and Soleus, which have yet to respond to requests for comment.

What’s at Stake

Research into Broadwood’s claims unveils an intriguing controversy at the center of one of ophthalmology's biggest acquisitions of the year.

STAAR is the clear global leader in phakic IOLs (intraocular lenses), which correct moderate-to-high myopia, or nearsightedness, through implants, without reshaping the cornea. This is a key differentiator from LASIK, which uses lasers to cut the cornea open.. The company controls roughly 75% of global phakic IOL procedures by units and over 90% by revenue, making it the dominant player in its niche.

• Japan: EVO ICLs are the market standard, commanding roughly 73% of all refractive procedures in the country.
  

• China: STAAR holds about 23% of the refractive surgery market, making it its largest market by volume, though recent volatility has hurt sales.
  

• United States: Roughly 17% share, but growing quickly since EVO ICL’s FDA approval in 2022.
  

• Global Average: EVO ICL accounts for more than 12% of refractive procedures worldwide, leaving significant room to take share from LASIK globally.
  

The company’s biggest challenges have centered on China. In Q1 2025, China revenue collapsed 99% as distributors worked through bloated inventory and consumer demand dried up amid macroeconomic weakness. Staar had previously front-loaded shipments, including a $27.5 million December 2024 order it agreed to defer revenue on, leaving distributors with excess product they didn’t need. The company even shipped consignment inventory that still sat on its books, delaying true order flow.

The fallout was severe. Staar faced a demand cliff just as markets outside China were accelerating. CEO Stephen Harper was brought on to help the company rebalance.

Proven Technology and a 30-Year Head Start

Concerns around eye implants, as seen in lawsuits involving other medical devices, center on the risk of malfunction, infection, or device failure. STAAR’s ICL franchise stands apart as the only FDA-approved posterior chamber phakic IOL in the United States, with a safety record backed by decades of real-world use.

STAAR’s ICL Timeline:
1982: STAAR founded as an IOL maker
1990s: Development of Collamer, STAAR’s proprietary collagen-copolymer lens material
1993: First ICL procedures performed in Europe
1997: CE Mark approval in Europe
2005: FDA approval for the Visian ICL
2011: EVO ICL launches internationally
2022: EVO and EVO+ ICL receive FDA approval, spurring U.S. growth

With nearly 30 years of commercial use and millions of successful implants worldwide, the ICL has a highly-credible safety profile among refractive implants.

A Patented Moat

STAAR does not just manufacture ICLs, it owns them. The company holds multiple patents covering:

• Collamer Material: a proprietary collagen-copolymer blend designed for optical clarity, biocompatibility, and stability over decades
  

• Lens Design: including the EVO and EVO+ models with central port technology, a key differentiator from older ICL designs
  

• Delivery Systems: including preloaded, single-use injector systems that simplify surgery and reduce contamination risk
  

STAAR is the exclusive global manufacturer of the EVO ICL family and controls more than 90% of the dollar share of the global market. No competitor can legally produce a direct substitute without licensing STAAR’s IP, a moat that could last well into the 2030s based on current patent life. Together, this history and patent protection strengthen the argument that STAAR is not just a growth story but a market leader with a de-risked, proprietary technology platform poised for wider adoption.

Clinical Outcomes: A Decades-Long Track Record

Millions of ICLs have been implanted worldwide, and multiple independent studies confirm the lens’ long-term safety and effectiveness:

• 10-Year Follow-Up Study: Found no infections or cataracts, very few reoperations, and stable vision over a decade
  

• Large-Scale Study (1,800+ Eyes): Showed most patients ended up very close to perfect vision, with temporary side effects like mild pressure changes resolving on their own
  

• Systematic Review (3,000+ Eyes): Found consistently high safety and efficacy scores across dozens of studies
  

• Lens Adjustments (<0.3% of Cases): Fewer than 3 in 1,000 eyes needed the lens realigned or swapped out, and those cases were successfully fixed
  

The Dark Side of LASIK

LASIK, or laser-assisted in situ keratomileusis, remains the world’s most common vision correction surgery, performed more than 40 million times globally. It involves cutting a flap in the cornea, reshaping the underlying tissue, and sealing the flap back in place to correct refractive errors. Around 95% of patients achieve 20/25 vision or better, a level sufficient for most daily activities.

But the 5% who suffer persistent complications face dry eyes, glare, halos, and night vision problems, sometimes permanently. The FDA’s 2022 Draft Guidance for LASIK Patient Labeling highlighted just how common early complications can be:

• Up to 85% of patients report dry eye symptoms at one week post-surgery, and 27% still have symptoms at six months
  

• 41% report glare, halos, starbursts, or double vision at six months, with about 4% calling them “very” or “extremely” bothersome
  

• Around 17% still use eye drops daily for dry eye five years later

The guidance also explicitly warns of rare but severe outcomes, including chronic pain, corneal ectasia, and even depression or suicidality, and recommends a patient checklist requiring patients to initial each risk before surgery.

Under the FDA’s guidance document remains a comment section filled with LASIK horror stories, including Steven Jantzen, who said, “LASIK ruined my life.” Eye doctors under the thread remained more positive on the surgery, with Trevor Woodhams saying, “It was one of the best decisions of my life. It has been over 20 years and I still have near 20/20 vision. I have also performed LASIK on my two children who are now in their 30s.”

In one widely reported case, 26-year-old police officer Ryan Kingerski took his own life after experiencing unrelenting pain, light sensitivity, and visual disturbances following LASIK.

The criticism of LASIK has even reached the people who helped bring it to market. Dr. Morris Waxler, the former head of the FDA branch that approved LASIK in the 1990s, has since said publicly that the agency “got it wrong” on safety. In a 2011 citizen petition to the FDA, Waxler asked the agency to withdraw its LASIK approvals, citing “widespread, severe adverse events” that he believed were underreported at the time of approval. In later interviews with ABC News and CBS, Waxler said, “I think we screwed up,” and “I would not recommend LASIK to anyone.”

ICL procedures, by contrast, do not involve reshaping the cornea, making them suitable for patients with mid-to-high myopia or thin corneas. While ICL carries risks such as cataract formation or elevated intraocular pressure, no suicides have been linked to the surgery, and complication rates are considered low when performed by experienced surgeons.

The FDA’s willingness to highlight these risks and consider standardized checklists suggests that regulatory scrutiny of LASIK is increasing, a trend that could shift patient preference toward alternatives like ICLs.

Alcon’s Expanding Reach

Alcon, a dominant player in eye care and LASIK technology, and makers of the WaveLight line of LASIK and PRK lasers, has been on an acquisition spree, completing six deals or majority investments since July 2024.

The company’s history with STAAR runs deep. Proxy filings reveal regular talks between Alcon CEO David Endicott and former Staar CEO Thomas Frinzi, which ultimately produced Alcon’s first and second bids.

There are governance questions too. Staar Chairwoman Dr. Elizabeth Yeu had been a consultant for Alcon as recently as October 2024. While she disclosed this relationship and was recused from one board meeting, the proxy leaves ambiguous whether she participated in the final acquisition vote. Former STAAR director Amy Winser, who stepped down in May 2025, also sits on the board of Lensar Therapeutics, another recent Alcon acquisition.

Aurion: A Case Study in Control

Perhaps the most striking precedent comes from Aurion Biotech, where Alcon’s board-level maneuvers have become the subject of litigation.

Aurion, a clinical-stage ophthalmology company preparing for a 2025 IPO, secured Series C backing from Deerfield Management and Alcon, each gaining board representation. Deerfield favored the IPO, but Alcon opposed it and steadily increased its stake.

On February 14, 2025, a day Deerfield calls the “Valentine’s Day Massacre,” Aurion’s Executive Board Chair and former STAAR CEO Thomas Frinzi abruptly resigned via email. Within minutes, Alcon installed its designee, Jeannette Bankes. The move created a 3–3 board deadlock, effectively freezing the IPO vote.

Deerfield alleges that Alcon deliberately engineered this deadlock to block the IPO and acquire Aurion at a discount, citing the relationship between Frinzi and Endicott, who were reported to be golf partners. In March, Alcon went further, acquiring a majority stake, replacing Aurion’s CEO, and taking control of the company’s strategy. Litigation is ongoing over whether these moves breached fiduciary duties and unfairly disadvantaged other shareholders.

The Bigger Picture

To critics, the STAAR deal fits a pattern: a dominant industry player consolidating a key competitor before its technology can disrupt the market.

Whether shareholders agree, and whether regulators take an interest, could determine not just STAAR’s future but the future of competition in the refractive surgery space. With the window-shop period open until September 19, the clock is ticking for rival suitors to emerge and for STAAR’s board to prove it ran a fair process.

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