STAAR Surgical's Response to Broadwood Partners' Claims: A Strategic Analysis

> A line chart illustrating STAAR Surgical's stock price volatility from August to September 2025, with annotations marking the merger announcement and the expiration of the "window shop" period on September 19, 2025. The chart highlights the 51% premium to the August 4 closing price and the 59% premium to the 90-day VWAP.

Visual:
- X-axis: Dates from August 1, 2025, to October 1, 2025.
- Y-axis: STAAR Surgical stock price (STAA) in USD.
- Key data points:
- August 4, 2025: Closing price of $18.49, as shown in the STAAR presentation.
- Merger announcement date: $28.00 per share offer, per the STAAR press release.
- September 19, 2025: "Window shop" period expiration, noted in a Panabee report.
- Annotations: "51% premium to August 4 close" and "59% premium to 90-day VWAP."

The proposed $28.00-per-share merger between STAAR Surgical and Alcon has ignited a high-stakes battle over corporate governance and shareholder value. At the center of the dispute is Broadwood Partners, a major shareholder that has accused STAAR's board of executing a flawed and rushed process, while the company has defended the transaction as a compelling value proposition amid deteriorating market conditions. This analysis examines the governance dynamics and shareholder confidence implications of the merger, drawing on public filings, board statements, and market data.

Broadwood's Allegations: Governance Concerns and Strategic Shortcomings

Broadwood Partners, which holds a significant stake in STAAR, has raised three primary objections to the Alcon merger. First, it claims the board engaged in a "flawed and limited process" by negotiating exclusively with Alcon, despite evidence of interest from other potential buyers in Broadwood's proxy filing. Second, Broadwood questions the independence of STAAR's board, citing the chair's prior consulting relationship with Alcon as a potential conflict of interest noted in the filing. Third, the firm argues the merger was rushed, with the board allegedly prioritizing speed over thoroughness in evaluating strategic alternatives, a point STAAR disputes in its public statement.

These claims reflect broader concerns about board accountability in mergers. According to a report by Bloomberg, such allegations often hinge on whether the board adhered to its fiduciary duties of care and loyalty. Broadwood's critique suggests it believes STAAR's board failed to maximize shareholder value by not securing a more competitive bidding process.

STAAR's Defense: Premium Value and Governance Integrity

STAAR's board has responded by emphasizing the merger's financial terms and governance rigor. The $28.00-per-share offer represents a 51% premium to the August 4, 2025, closing price and a 59% premium to the 90-day volume-weighted average price (VWAP), per the company's press release. The board argues this premium reflects the inherent risks of STAAR's standalone operations, including a 55% year-over-year decline in China sales in Q2 2025 and a single-product business model vulnerable to macroeconomic and competitive pressures, as described in the Panabee report.

On governance, STAAR has dismissed Broadwood's claims as "misleading and misinformed," highlighting that the board's chair has extensive ophthalmic industry experience, which enhances her effectiveness as a director. The company also clarified that the merger process began in 2024 and involved a comprehensive review of strategic alternatives, with no competing bids emerging during the 45-day "window shop" period that expired on September 19, 2025. This timeline, STAAR argues, underscores the transaction's thoroughness and the lack of alternative offers.

Shareholder Confidence: A Divided Landscape

The merger has sparked a polarized shareholder response. While STAAR's board and independent analysts advocate for the deal as a "certain cash value" offering, Broadwood's opposition has introduced uncertainty. As of October 2025, the outcome of the October 23 shareholder vote remains unresolved, with Broadwood's influence potentially blocking the merger unless other major stakeholders, such as Soleus Capital and Armistice Capital, align with the board, a point the STAAR presentation emphasizes.

Market data further complicates the picture. STAAR's stock price, which closed at $18.49 on August 4, 2025 (as shown in the STAAR presentation), surged following the merger announcement but has since fluctuated amid ongoing debates. A Morningstar report notes that the stock's performance reflects investor skepticism about STAAR's long-term prospects as a standalone entity, particularly in China, where declining sales have persisted despite management's mitigation efforts.

Implications for Corporate Governance

This case highlights the delicate balance boards must strike between urgency and due diligence in mergers. STAAR's defense of its process-emphasizing the premium offered and the absence of competing bids-aligns with the "entire fairness" standard often applied in mergers where a board can demonstrate it acted in shareholders' best interests, a point Broadwood raises in its filing. However, Broadwood's focus on board independence and process transparency underscores the growing scrutiny of governance practices in activist campaigns.

For shareholders, the merger vote will test their trust in STAAR's board to navigate complex market challenges. If approved, the deal could signal confidence in the board's governance framework. If rejected, it may prompt a reevaluation of the board's strategies and oversight mechanisms.

Conclusion

STAAR Surgical's Alcon merger represents a pivotal moment for the company's governance and shareholder relations. While the board has defended the transaction as a premium value play amid deteriorating market conditions, Broadwood's allegations have exposed tensions over process transparency and board independence. As the October 23 vote approaches, the outcome will not only determine the merger's fate but also serve as a litmus test for STAAR's commitment to robust corporate governance.