Staar Surgical shareholder comments on amendments to sale to Alcon

Broadwood Partners commented on the recent filing of amendments to the merger agreement in connection with the proposed sale of Staar Surgical (STAA) to Alcon (ALC). Neal Bradsher, founder and president of Broadwood, said: “For more than three months, we have been telling the Board of Directors that its decision to sell STAAR to Alcon came at the wrong time, resulted from the wrong process, and was at the wrong price. The vast majority of shareholders and all three major proxy advisory firms shared our perspective and overwhelmingly opposed this misbegotten transaction. We are pleased that the Board now recognizes – albeit belatedly – the flaws in its initial process, including with respect to timing, and acknowledges the benefits of a wider solicitation of proposals. However, as we have pointed out for months, ‘window shops’ and ‘go-shops’ are never good substitutes for a well-designed, well-timed, thorough sale process. One thing we are certain of: shareholders will have little confidence in the outcome of this ‘go-shop’ if the same directors, bankers, and lawyers who designed and executed an inappropriate and flawed sale process in the first place remain in exclusive control of these new palliative measures. As STAAR’s largest shareholder, we have been asking for weeks for the Board to engage in dialogue with shareholders and for changes to the Board so that truly independent directors could assist in the evaluation of the best path forward. This Board has confounded us and our fellow shareholders with its myriad, and apparently conflict-ridden, decisions and lack of transparency, including about other strategic interest in the Company. Given these missteps, and the lack of sufficient public company sale experience on the Board, having new directors to ensure there are no further false starts, delays, misrepresentations, or mistakes is more critical than ever in our view. We understand that the founder of one of STAAR’s largest shareholders, Yunqi Capital, has expressed an interest in serving on the Board. And we remain willing to identify other qualified and independent candidates for the Board, including candidates who have experience overseeing well-managed sale processes and have a strong understanding of directors’ fiduciary duties to shareholders. The Board should have some humility. It repeatedly and vociferously recommended the Alcon deal, which was roundly and overwhelmingly rejected by shareholders and proxy advisory firms alike. In a continuing scramble to salvage its ill-conceived deal, the Board has now delayed the shareholder vote three separate times. Dare we say, the problem lies with the Board, not with the shareholders; all the delays and patches and band-aids just underscore that point. As the Board can surely appreciate, we have lost confidence in the Board’s ability to make good and objective decisions on our behalf. The right, humble, and necessary response is for this Board to embrace accountability and sound governance by augmenting its membership with new directors whom investors can trust. Absent such a responsible move, we believe shareholders will doubt the outcome of this appended go-shop ‘fix-er-up’ process, and the credibility of the Board will be even further damaged in the eyes of shareholders.”