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Investing.com -- The $28-a-share sale of STAAR Surgical Company (NASDAQ:STAA) to Alcon AG (NYSE:ALC) has become one of the most intriguing takeover stories of recent memory. Since the merger announcement in August, the deal has snowballed into a full-blown governance war: Broadwood Partners, STAAR’s largest shareholder, accusing the board of a rushed, conflicted process; proxy advisers blasting the deal; and shareholder litigation.
On Oct. 15, Institutional Shareholder Services (ISS) recommended that shareholders vote against the merger, joining Glass Lewis and Egan-Jones and aligning with roughly 34% of STAAR’s outstanding shares that have publicly opposed the transaction.
The Oct. 23 vote now stands as a referendum on STAAR’s leadership as much as on the deal itself: a victory for activists if shareholders reject the merger, or a vindication for the board if it passes. In its new report, ISS cited “deficiencies, disconnects, and uncertainties” in the deal’s timing, process, and valuation, echoing three arguments Broadwood has pressed from the start.
A rare advisor consensus
It is uncommon for all three major proxy advisers to reach the same negative conclusion on a merger, a unanimity that materially increases the odds shareholders will reject a transaction. The last time all three big advisers lined up publicly against a merger was the deal between Diversified Healthcare Trust and Office Properties Trust in 2023, which fell apart shortly after.
Three pillars of opposition
Below we unpack ISS’s three central criticisms: wrong time, wrong process, wrong price, and place Glass Lewis, Egan-Jones and Broadwood’s positions next to STAAR’s rebuttals so readers can see how proxy firm analysis, activist demands and company defenses line up.
1) The Wrong Time
ISS: The firm stressed that STAAR’s fundamentals and cash position, together with better-than-expected Q2 results, made the timing of the sale questionable. ISS highlighted that the transaction was announced before the company’s Q2 earnings, which beat expectations and disclosed inventory improvements in China, and flagged that the board’s sudden pessimism warranted skepticism.
Glass Lewis / Egan-Jones: Glass Lewis raised similar concerns about the timing and the abrupt shift in STAAR’s messaging; Egan-Jones likewise signaled that the company appeared to be presenting a softened standalone outlook in ways that made the Alcon bid look comparatively attractive.
Broadwood: The activist has repeatedly argued STAAR’s operational headwinds in China were transient, that new management had taken concrete cost and inventory steps, and that the company was starting to show improving margins, meaning shareholders were being asked to sell at an artificially low cycle point.
STAAR’s rebuttal: STAAR has maintained the board acted in shareholders’ best interests given the historic share price deterioration, China exposure and regulatory risks. The company has repeatedly said the Alcon offer delivered immediate liquidity and a significant premium to the unaffected trading price and that the board carefully considered strategic alternatives. STAAR reiterated its unanimous recommendation to vote FOR the merger in investor releases.
2) The Wrong Process
ISS: The report questioned whether the wider board was fully informed about inbound interest from other parties, notably the “Party C” outreach to the CEO and chair in April that was not disclosed to the full board, and flagged the absence of an open auction as a material weakness in the sale process. ISS said those facts, together with the Chair Yeu’s prior consulting relationship with Alcon, were troubling for shareholders.
Glass Lewis / Egan-Jones: Glass Lewis had already highlighted process flaws and possible conflicts, saying the sale was not sufficiently market-tested; Egan-Jones used similarly blunt language about the speed and incompleteness of the process.
Broadwood: Broadwood’s narrative rests on the same account: that the board failed to run a broad outreach and that management and the chair funneled the company toward Alcon. Broadwood says it has spoken to multiple third parties that expressed interest in a deal, and that at least one “strategic buyer” (later acknowledged by STAAR as Party C) was effectively ignored. Broadwood has repeatedly said the board’s window-shop and limited engagement with Parties A, B, and C were inadequate.
STAAR’s rebuttal: STAAR told ISS and the market that the outreach from Party C contained no valuation, financing or timing terms and therefore did not become a live competitive alternative; the board also argued that its view of the relevant buyer universe (and Citi’s analysis) supported the decision to focus on Alcon and that a 45-day window shop was agreed to provide a measure of market testing. The company has emphasized that no superior offer emerged during the window shop, or in the months leading up to the merger following the spread of sale rumors.
3) The Wrong Price
ISS: ISS underscored that while the offer was a large premium to the unaffected date, it still represented a nearly 30% discount to STAAR’s 52-week high and that STAAR’s turnaround progress meant shareholders could reasonably anchor to a higher historical range. ISS concluded it was “difficult to identify a compelling reason” for shareholders to support the $28 price on current terms.
Glass Lewis / Egan-Jones: Both advisors argued the consideration understates STAAR’s intrinsic value and growth potential; Glass Lewis questioned whether the fairness analysis had used appropriate peer and precedent comparisons.
Broadwood: Broadwood’s valuation walkthrough points to historical trading, peer multiples and evidence that Alcon had previously offered materially more, with STAAR disclosing a $58/share all-cash offer and a $55/share all-cash over with a $7/share CVR, concluding Alcon can pay meaningfully more if the process were properly run. Broadwood’s models place a materially higher per-share value than $28.
STAAR’s rebuttal: STAAR and its financial adviser Citi argue the $28 cash offer represents a meaningful, certain premium to the unaffected trading price and that it is supported by multiple valuation methodologies; the board has defended the fairness opinion and the negotiated form of consideration.
Conflicts of interest: Yeu, Farrell and the Party A/B/C disclosures
The conflict story is the narrative’s most combustible element. STAAR’s proxy initially disclosed that Board Chair Dr. Elizabeth Yeu had a prior consulting relationship with Alcon in 2024. Later, Glass Lewis disclosed, and STAAR later confirmed in a proxy supplement, that an outreach from a strategic buyer (“Party C”) in April had been routed to CEO Stephen Farrell and Dr. Yeu and was not shared with the full board. ISS seized on that omission as a key indicator the board’s decision-making may have been impaired.
STAAR’s initial proxy describes Party A, a PE firm with China exposure, and Party B, a healthcare investment platform, as parties that had expressed preliminary interest but that neither provided proposals with valuation or financing terms before the Merger Agreement was executed. ISS treats those unilateral, non-termized outreaches as insufficient evidence that a full auction would have produced a better result, but it still emphasized that nondisclosure to the wider board raised legitimate shareholder concerns.
Broadwood has framed the Yeu/Party C sequence as evidence the board was steered into an outcome rather than tested by the market.
In its latest press release dated Oct. 16, STAAR countered, accusing Broadwood of misrepresenting basic facts about the outreach from other parties. “Broadwood is misrepresenting introductory emails as offers to acquire STAAR,” the company said, adding that communications from Parties A, B, and C “were not offers” and contained no valuation, timing, or financing details. STAAR reaffirmed that Alcon’s proposal was the only bona fide offer ever received.
Other players
The ISS recommendation completes a cluster of proxy firm opposition: Glass Lewis, Egan-Jones, and now ISS have all recommended against the transaction. Several sizable shareholders, Broadwood (27.5%), Yunqi Capital (5.1%), Defender Capital (1.5%), and certain public funds and insiders including former CEO David Bailey, have publicly opposed the deal. Combined, shareholders that publicly oppose the deal represent more than 34% of shares, according to Broadwood’s latest release.
Not all large holders oppose the deal: Soleus Capital (6%) has publicly signaled support, and STAAR continues to push its unanimous board recommendation and white proxy card. The split among large holders makes the Oct. 23 meeting a toss-up.
Litigation, proxy supplements and timing
The proxy supplement STAAR filed on Oct. 13 (and the subsequent clarification on Party C) followed shareholder litigation filed in New York challenging the proxy’s disclosures. STAAR said it supplemented the proxy voluntarily to avoid nuisance, delay and expense while standing by the merits of the deal, but the litigation and the late disclosure created another layer of uncertainty for voters. ISS specifically referenced the late disclosure and the timing of the Q2 release in its analysis.
Why the vote matters beyond stock price
This is as much a governance fight as a valuation fight. If shareholders reject the deal, it will underscore that investors and proxy advisers will not accept what they view as truncated, conflicted processes, even when management offers a cash premium. If the deal passes despite unanimous advisory opposition, it would raise questions about the influence of proxy advisers and the ability of an entrenched board to push through a contested sale.
Broadwood has suggested that if the deal fails, it will push to reconstitute the board and press a different path: standalone execution under new governance, or a properly run sale process that tests the market. STAAR has warned that a “no” vote risks destabilizing the company and ceding control to activists.
Conclusion… is the bell tolling?
With ISS joining Glass Lewis and Egan-Jones, and more than a third of shares publicly opposing the transaction, the scale of proxy advisor resistance is rare and significant. The Oct. 23 shareholder vote will decide whether STAAR’s board keeps the Alcon deal on track, or if Broadwood’s campaign has paid off.