Alcon's $1.5 Billion STAAR Surgical Acquisition: Undervaluation Claims and Shareholder Activism Take Center Stage

The proposed acquisition of STAAR Surgical by Alcon-a $1.5 billion cash deal valued at $28 per share-has ignited a fierce debate over whether the offer underestimates STAAR's intrinsic value and whether the sale process was sufficiently rigorous. While Alcon and STAAR's board argue the deal enhances strategic capabilities in vision correction, activist investor Broadwood Partners and legal firms have raised alarms about undervaluation, flawed due diligence, and potential fiduciary breaches.

Strategic Rationale vs. Undervaluation Claims

Alcon's acquisition of STAAR is framed as a strategic move to expand its surgical vision correction portfolio, particularly for patients with moderate to high myopia. STAAR's EVO Implantable Collamer® Lenses (EVO ICL) offer a minimally invasive alternative to LASIK, a market segment where Alcon sees growth potential, according to STAAR's press release. The $28-per-share offer represents a 51% premium to STAAR's August 4, 2025, closing price and a 59% premium to its 90-day volume-weighted average price, according to the Los Angeles Times.

However, Broadwood Partners, a 27.5% stakeholder, contends the price fails to reflect STAAR's recent operational turnaround and future potential. The activist firm argues that the sale process was "flawed and limited," with only one active bidder engaged and insufficient time for alternatives to emerge, according to Broadwood's presentation. Broadwood also highlights that STAAR's second-quarter earnings and management projections-released after the merger was announced-showed improved financial health, suggesting the board acted prematurely, according to STAAR's financials.

Financial Performance and Analyst Skepticism

STAAR's financials underscore the complexity of the valuation debate. In Q1 2025, the company reported a 44.9% year-on-year decline in net sales to $42.59 million, driven by a planned inventory reduction in China. However, sales excluding China rose 9%, indicating resilience in other markets, per STAAR's financials. Despite beating revenue estimates by 5.5%, STAAR posted a GAAP loss of $1.10 per share, far below analyst expectations, as reported by the Los Angeles Times.

Historical analysis of STAA's earnings beats from 2022 to 2025 reveals that while the stock typically surges by an average of +4.4% on the day of the beat, the effect is short-lived and often turns negative within four days, with no statistically significant outperformance over 30-day horizons. However, with only three qualifying events in this period, the data's statistical power is limited.

Shareholder Activism and Legal Scrutiny

The activist pushback has drawn legal attention. Firms like Kaskela Law LLC and The Ademi Firm are investigating whether the merger violates fiduciary duties, with a focus on the fairness of the $28-per-share offer. Broadwood's critique centers on procedural flaws: the board allegedly rushed the sale without a robust auction process, potentially leaving money on the table for shareholders (Broadwood's presentation).

STAAR's board defends the merger as the "best path forward," citing declining sales in China and a competitive market landscape as justification for the deal (STAAR's press release). However, critics argue that the company's standalone challenges-such as regulatory hurdles and market saturation-could be mitigated through alternative strategies, not just acquisition (STAAR's financials).

Conclusion: A Clash of Value and Process

The Alcon-STAAR deal epitomizes the tension between strategic logic and shareholder value. While Alcon's premium offer appears generous on paper, the lack of a competitive bidding process and STAAR's recent operational improvements have fueled skepticism. For investors, the key question is whether the $28-per-share price captures STAAR's long-term potential or reflects a hasty exit. As legal and activist scrutiny intensifies, the outcome may set a precedent for how boards balance strategic rationale with shareholder demands in high-stakes mergers.