It seemed like a good match. At least on paper, anyway. 

On paper, the basic ingredients existed for a successful—if not harmonious—relationship: compatibility, admiration, mutual respect, and common interests. 

It was those shared interests, in fact, that first drew the two to one another. United in mission and smitten by the other’s respective fortes, Alcon and STAAR Surgical Company announced their impending union last summer.

In publicizing their coupling, the pair each highlighted the other’s strong suits. For Alcon, it was STAAR Surgical’s proprietary EVO Implantable Collamer Lenses, while STAAR was smitten with Alcon’s fiscal fortitude.

With their board members’ blessing, the pair set a six- to 12-month engagement. However, signs of trouble slowly surfaced as the seasons turned: multiple postponements of STAAR Surgical’s shareholder meeting, merger arbitration, investor activism, a go shop, and proxy firms opposition.

A majority of STAAR’s shareholders concurred with that opposition, too—72% of the company’s investors planned to vote against the $1.5 billion Alcon deal at the original (postponed) shareholder meeting in October, a U.S. Securities and Exchange Commission filing indicated.

“The company’s sudden adjournment of the special meeting scheduled for October 23 and this most recent postponement—both without any substantive explanation—indicate that the Board is attempting to revive a transaction that shareholders have already clearly signaled they do not support,” Christopher M. Wang, founder/chief investment officer of Hong Kong-based investment management firm Yunqi Capital Limited, wrote in an Oct. 31 letter to the STAAR Surgical board. Yunqi Capital owns 5.1% of STAAR Surgical stock.

“We urge the Board to acknowledge the outcome that shareholders have already signaled and to take steps consistent with its fiduciary obligations to protect and enhance shareholder value.”

Wang wasn’t Alcon’s only detractor, though. Broadwood Partners L.P., and its affiliates, which own 31% of STAAR Surgical stock, never really warmed up to the eye care giant, either. 

Broadwood opposed the Alcon-STAAR deal from the outset. In fact, the investment firm campaigned so aggressively against the acquisition that it sparked a brief but fervid battle with STAAR Surgical’s board. 

After unsuccessfully shopping around for alternative merger proposals late last fall (permitted under an amended acquisition proposal with Alcon), STAAR Surgical released a lengthy statement to correct “misinformation” from Broadwood about its 30-day “go-shop” process.

STAAR Surgical denied Broadwood’s claims that it deliberately put off interest from a credible buyer during that month-long solicitation period. “That is patently false,” the company contended in a Dec. 11 news release. “Broadwood is again twisting facts related to STAAR’s engagement with parties during the go-shop process, and this is just their latest attempt to derail STAAR’s efforts to maximize value for all stockholders.”

STAAR Surgical identified the “credible buyer” as Chinese investment firm FountainVest, and claimed the company waited until the 21st day of the 30-day go-shop period to contact STAAR. FountainVest did not show any interest in possibly purchasing STAAR before the Alcon deal or during the go-shop period “post-signing,” STAAR Surgical argued.

Nevertheless, STAAR Surgical CEO Stephen Farrell responded to FountainVest within 24 hours (day 22) and connected the firm with STAAR’s advisors, the company professed. FountainVest, however, declined to execute a standard non-disclosure agreement associated with the inquiry, and the go-shop period expired without any other proposals, STAAR Surgical asserted.

“This is just another example of the misinformation campaign being conducted by Broadwood,” Farrell remarked. “This is a pattern, just like Broadwood’s inaccurate characterization of STAAR’s growth rate and its disconnected perspective of market conditions in China.”

STAAR Surgical also refuted Broadwood’s allegation that its board ignored interest last spring and summer from several other potential buyers, one of which was “a well-capitalized and leading ophthalmology company.” 

In the days leading up to a Dec. 19 shareholder vote, STAAR Surgical touted supportive analyst reports and an updated assessment from independent proxy advisory firm Institutional Shareholder Services backing the Alcon deal.

Two days before the shareholder vote, STAAR Surgical released an open letter to stockholders advising them to approve the Alcon merger and not be influenced by Broadwood’s “uninformed views…” STAAR Surgical also reminded stockholders of Broadwood’s repeated threats to remove half of the company’s board members via an activist proxy contest. 

Broadwood actually followed through on those threats once stockholders rejected the Alcon deal in early January, despite the larger firm’s last-ditch offer to purchase all outstanding STAAR shares for $30.75 in cash, worth an extra $150 million in equity. Nine days after that vote, Broadwood and STAAR Surgical entered a “cooperation agreement” that resulted in three new board members (one of whom is Wang from Yunqi Capital), and Farrell’s departure on Feb. 1. STAAR Surgical is now actively searching for a new leader.

That’s quite the rapid reconciliation. For Alcon, the concord proves that even the brightest STAAR can quickly dim.