Broadwood Partners: Leading Advisory Firm Glass Lewis Urges STAAR Shareholders to Vote “AGAINST” Sale to Alcon
Glass Lewis Highlights Numerous Concerns Regarding the Sale Process, Timing, and Price
Confirms CEO and Chair Did Not Disclose Information to the Rest of the Board About Inbound Interest in Acquiring the Company
Finds STAAR Shareholders Would Be Better Served by Rejecting the Proposed Merger
“Glass Lewis’s recommendation and findings underscore our strong belief that STAAR conducted a highly questionable sale process that resulted in an ill-timed deal that significantly undervalues the Company and its compelling prospects. We are confident that better alternatives exist than this deeply flawed and short-sighted transaction,” said
“STAAR’s representatives admitted during their meeting with Glass Lewis that CEO
Shareholders representing more than 34% of STAAR’s outstanding common shares – including
Glass Lewis stated in its report: “Investors would be better served scuppering the current arrangement in favor of either a full process reset or … the unadulterated pursuit of the Company's standalone potential.”1
Broadwood urges all shareholders to protect the long-term value of their investment by voting the GREEN Proxy Card “AGAINST” STAAR’s proposed sale to
In making its recommendation, Glass Lewis agreed with Broadwood’s core assertion that the Proposed Merger comes at the wrong time, followed the wrong process, and is at the wrong price.
The Wrong Time
- “Management’s projections – disclosed in STAAR's [proxy statement] and characterized by representatives of the Company as reflecting a ‘dramatic turnaround’ during our engagement – codify clear expectations around an operational rebound as early as 2026… [W]e struggle to see the proposed transaction as an imminently necessary alternative to STAAR’s standalone recovery …”
- “…STAAR floated the current deal one day prior to 2Q25 results containing new information relating to the Company’s standalone performance and prospects. This methodology expressly preempted the market’s ability to separately reappraise STAAR’s standalone value, while also limiting the board's ability to leverage any re-rating to create negotiating friction with Alcon.”
- “…[T]he board’s election to execute and announce the current deal just prior to 2Q25 results necessarily blunted price discovery reflective of STAAR’s most recent standalone operating performance. Given the degree to which STAAR’s metrics exceeded expectations, we find it comparatively difficult to see how this tack clearly aligns with maximizing value.”
- “…STAAR is financially stable and, by its own accounting, anticipates a material and relatively near‑term return to growth across several fundamental metrics. Our own review thus puts us in a difficult position to suggest unaffiliated investors have been afforded sufficiently compelling quantitative cause to cede exposure to that upside in exchange for a one-time cash-out.”
The Wrong Process
- “We do not see persuasive cause for investors to conclude the board’s review was at all thorough or proactive, and believe available information raises substantial and credible questions regarding timing, cadence and transparency.”
- “Broadwood is successful in highlighting an evident and multifarious set of procedural failings.”
- “…[D]espite indeterminate and seemingly poorly relayed inbound contact from at least one strategic entity and unsolicited interest from at least two other parties later in a very brisk engagement, the board did not make any meaningful effort to accommodate a more thorough pre-execution exploration of competing offers.”
- “…[W]e believe available disclosure introduces a litany of concerns around procedural depth and efficacy, with the board skirting a true market check, giving short shrift to at least two inbound expressions of interest… and leaning on a ‘window shop’ process with little practical likelihood of producing a competing offer for the Company.”
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“…STAAR’s stance on engagement and solicitation paints the board’s involvement as rather passive during the substantial bulk of the noted timeframe…
Alcon was only asked to bid against itself, with the board consistently declining to undertake any outbound solicitation.”
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“Representatives of STAAR acknowledged on our engagement call that some contact [with a well‑capitalized and leading ophthalmology company] had indeed occurred, that
Mr. Farrell andDr. Yeu were aware of such contact, but that no other members of the board were informed of related communication. We are not under the impressionMr. Farrell orDr. Yeu responded to this contact, which does not appear to be disclosed in STAAR's circular. This underscores the board's fractured and disconcertingly dormant methodology, and leaves investors – and, seemingly, the balance of the board, to the best of our awareness – in a poor position to fully understand the pre-execution landscape.”
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“…[T]he total golden parachute afforded to
Mr. Farrell may ultimately total roughly$23.7 million – including an egregious$6.8 million tax gross up… – representing an altogether tremendous windfall for five months of pre-execution executive service. It is challenging not to see this figure shading STAAR’s siloed, expedited process…”
- “Competing bidders must contend with a compressed diligence and engagement window, value-dampening termination fees (‘nominal’ or otherwise), ‘superior offer’ thresholds codified in executed merger documentation and potentially scale-tipping rights afforded to the existing acquiror…While a sufficiently interested buyer could indeed still approach STAAR despite the foregoing overhang, it would be disingenuous to suggest these considerations are not pointedly evident deterrents when contrasted with an unencumbered pre-announcement market check.”
The Wrong Price
- “…[O]n a forward-looking basis, the deal appears to track below sector buyout trends and toward an evident near-term trough in STAAR's historical valuation, neither of which suggests the current offer should be considered decisively attractive.”
- “On a forward-looking basis – an approach we consider more relevant here, given STAAR’s trailing dynamics and projected recovery – we see the current terms imply an NTM revenue multiple of approximately 4.56x. Viewed against [precedent healthcare equipment and supplies transactions], that multiple would fall at the 34th percentile, below both the median (5.1x) and mean (6.2x) NTM revenue multiples implied by those transactions.”
- “STAAR’s unaffected three- and five-year average NTM multiples of 5.6x and 10.7x, respectively, track well above the deal multiple, further stressing that the proposed transaction rests on a relatively recent trading nadir pegged to interim operational dislocation.”
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“…STAAR eclipsed the high-end of [its financial advisor] Citi's 2026E revenue multiple reference range on a stand-alone basis as recently as
May 12, 2025 (3.2x) and had not closed below the low‑end of the adviser's range for more than 15 years prior to execution (1.7x onMarch 4, 2010 ). Given these factors, we are concerned Citi's comparables review generally frames STAAR's valuation below its standalone reference points…”
Broadwood encourages its fellow shareholders to review its presentation, its proxy materials, and its press releases, all of which are available at www.LetSTAARShine.com.
About Broadwood
Certain Information Concerning the Participants
Information about the Participants and a description of their direct or indirect interests, by security holdings or otherwise, is contained on an amendment to Schedule 13D filed by the Participants with the
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1 Permission to use quotes neither sought nor obtained. Emphasis added. |
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