Street Calls of the Week
HONG KONG - Yunqi Capital Limited, a 5.1% shareholder in STAAR Surgical Company (NASDAQ:STAA), announced Monday its opposition to the proposed $28 per share acquisition by Alcon Inc. (SIX/NYSE:ALC). According to InvestingPro data, STAAR maintains a strong financial position with a current ratio of 4.94 and more cash than debt on its balance sheet.
In an open letter to shareholders, the Hong Kong-based investment firm argued that the deal announced on August 5 "significantly undervalues" STAAR and criticized the board for not conducting a thorough sales process.
Yunqi Capital, which owns approximately 2.5 million shares, stated that the $28 offer represents a 26% discount to STAAR’s 52-week high price and a 49% discount to Alcon’s original October 2024 offer of $55 per share.
The investment firm challenged the board’s pessimistic view of STAAR’s prospects in China, citing the company’s own recent regulatory filings indicating inventory normalization and expected revenue recovery in the second half of fiscal 2025. InvestingPro analysis reveals the company maintains healthy liquidity with assets exceeding short-term obligations, though analysts anticipate a sales decline in the current year.
"We believe the Board chose to engage meaningfully only with Alcon as the sole counterparty, rather than conducting a sufficient market check," Yunqi stated in its letter, also noting the merger agreement’s lack of a go-shop provision and the "short window-shop period" as impediments to alternative bids.
Yunqi’s opposition follows a similar campaign by Broadwood Partners, STAAR’s largest shareholder with a 27.4% stake, which is also soliciting proxies against the merger.
STAAR Surgical manufactures phakic implantable lenses used in corrective eye surgery. The company released its second quarter financial results the day after the merger announcement.
Yunqi Capital indicated it intends to vote against the proposed merger unless terms are revised to address what it considers inadequate consideration. The statement was based on a press release issued by the investment firm.
In other recent news, STAAR Surgical has been the focus of significant developments, most notably its acquisition by Alcon for $1.5 billion. This deal values STAAR Surgical at $28 per share, representing a substantial premium over its recent average stock prices. Following the announcement, several analyst firms adjusted their ratings and price targets for STAAR Surgical. Stifel downgraded the stock from Buy to Hold, while raising its price target to $28.00, citing the strategic sense of the acquisition. Similarly, Sidoti downgraded the stock to Neutral, aligning its price target with the acquisition offer. Canaccord Genuity maintained its Hold rating but also increased its price target to $28.00. Additionally, STAAR Surgical announced the appointment of Deborah Andrews as Chief Financial Officer, effective June 25, 2025. Andrews has been serving as Interim CFO and previously held the CFO position at the company.
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