Why STAAR Shareholders Should Heed Glass Lewis's Advisory and Avoid the Alcon Takeover

In the high-stakes world of corporate takeovers, the line between strategic growth and short-term expediency often blurs. The proposed $28-per-share acquisition of STAAR Surgical Company by Alcon Inc. has ignited a fierce debate among shareholders, with proxy advisory firm Glass Lewis issuing a stark warning: vote against the deal. This recommendation is not merely a contrarian stance but a calculated critique rooted in corporate governance failures and a misalignment with long-term shareholder value.

Corporate Governance: A Flawed Process and Opaque Leadership

At the heart of Glass Lewis's advisory lies a fundamental concern about the integrity of STAAR's board and its decision-making process. According to a Business Wire report, the advisory firm highlighted that key decision-makers, including the CEO and Chair, failed to disclose critical information about inbound interest to the broader board or shareholders (Business Wire report). This lack of transparency raises red flags about the board's fiduciary duty. A robust sale process, one that invites competitive bidding and ensures full disclosure, is the bedrock of corporate governance. Yet, in this case, the process appears rushed and self-serving.

Compounding these concerns is the $23.7 million "golden parachute" for STAAR's CEO, a payout that Broadwood Partners, a major shareholder, has condemned as a reward for poor stewardship. Such compensation packages, often shielded by "double-trigger" clauses, incentivize executives to prioritize personal security over shareholder interests. Glass Lewis's call for a "full process reset" is not just about securing a better price-it's about restoring trust in the board's ability to act in the company's best interest.

Financial Underpinnings: A Deal That Undervalues Potential

The financial rationale for the Alcon takeover is equally unconvincing. The $28-per-share offer implies a forward revenue multiple of 4.56x, which ranks at the 34th percentile compared to similar healthcare equipment transactions. By historical standards, this is a steep discount. STAAR's recent performance, though challenged by market headwinds in China, has shown signs of recovery. A 2025 sell-side analysis projected a rebound in profitability by late 2025, yet the deal was announced just before the release of 2Q25 results-a timing choice that limits the market's ability to reassess the company's standalone value.

This raises a critical question: Is Alcon's offer a reflection of STAAR's intrinsic worth, or a strategic lowball tactic to exploit short-term volatility? The latter seems more plausible. As stated by Broadwood Partners, the limited window for competing bidders-coupled with the board's premature commitment-suggests a failure to maximize value. In a sector where innovation and market share are paramount, undervaluing a company's future growth prospects is a disservice to its shareholders.

Shareholder Value vs. Short-Term Gains

STAAR's board, of course, defends the merger as a "compelling premium" over recent stock prices and analyst targets, according to STAAR's press release (STAAR's press release). Yet this argument conflates immediate gratification with sustainable value creation. A $28-per-share offer may seem attractive in the context of recent volatility, but it ignores the company's long-term trajectory. The healthcare equipment sector is poised for growth, with demand for precision surgical tools expected to rise alongside an aging global population. By selling now, STAAR shareholders risk locking in a price that fails to capitalize on these tailwinds.

Glass Lewis's alternative-focusing on STAAR's standalone potential-is not without merit. A reset in the sale process could attract bidders willing to pay closer to industry benchmarks. Alternatively, a renewed commitment to organic growth, bolstered by strategic R&D investments, could unlock value that a hasty merger would erase.

Conclusion: A Call for Prudence

The Alcon takeover is not a transaction but a test of corporate governance. Glass Lewis's advisory serves as a reminder that boards must act as stewards, not facilitators, of shareholder value. In this case, the evidence points to a process that prioritizes convenience over rigor, and short-term gains over long-term potential. Shareholders who heed this advice may find themselves better positioned to navigate the uncertainties of the healthcare sector-and to demand the accountability that good governance demands.