Yunqi Capital opposes STAAR Surgical merger with Alcon

Yunqi Capital Limited, a 5.1% shareholder of STAAR Surgical Company (NASDAQ: STAA), released an open letter reiterating its opposition to the proposed merger with Alcon Inc. (SIX/NYSE: ALC) announced August 5, 2025.

The Hong Kong-based investment firm argues that STAAR underestimates its business strength and future prospects, particularly in China, its largest market. Yunqi Capital contends that recent revenue declines were driven by temporary distributor inventory adjustments rather than structural weakness.

According to the letter, STAAR's China operations experienced revenue drops of 82%, 99%, and 92% year-over-year in Q4 2024, Q1 2025, and Q2 2025, respectively. However, STAAR's most recent 10-Q filing confirmed that distributor inventory levels in China have returned to historical levels.

Yunqi Capital also criticized the compensation structure for STAAR's executives under the proposed merger. According to SEC filings, named executive officers stand to receive an estimated $55 million, including approximately $24 million for CEO Stephen Farrell, who was appointed earlier this year.

The investment firm believes STAAR could achieve significant operational improvements as a standalone company. It projects potential EBITDA of up to $200 million through cost reductions, compared to the company's current forecast of $100 million in EBITDA.

Broadwood Partners, another STAAR shareholder, has also opposed the merger in a separate presentation titled "The Wrong Time, Wrong Process and Wrong Price."

STAAR's Implantable Collamer Lens technology has shown market penetration beyond high myopia patients, with data from the American Society of Cataract and Refractive Surgery indicating growth in moderate myopia segments from 2022 to 2024.

The information is based on a press release from Yunqi Capital, which manages over $250 million in assets and employs a fundamental long-short equity strategy focused on companies with China connections.

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