Staar Surgical shareholder issues letter opposing Alcon merger

Yunqi Capital, an investment management firm and 5.1% shareholder of Staar Surgical (STAA) released the following letter to Staar shareholders regarding the closing of Staar’s go-shop period and the revised offer of Alcon (ALC) to acquire Staar for $30.75 per share. The text of the letter is as follows: “We are writing to share with you our continued opposition to the proposed transaction. After reviewing the announcements by STAAR and Alcon regarding the course and closing of the 30-day go-shop period, and Alcon’s revised offer of $30.75 per share, we remain opposed to the merger even at the increased price and will continue to vote our shares AGAINST it… But, as we have also noted before, we struggle to understand how the Board can genuinely view the stated premium as compelling for shareholders, given that business cycles clearly impacting the Company last substantially longer than 90 or even 180 days. In prior earnings disclosures, the Company consistently acknowledged working through cyclical challenges, such as excess inventory and macroeconomic trends in China. Most recently, STAAR’s third quarter results show there is solid and accelerating demand for its ICL technology in China and globally, and they indicate that the challenges of the past year reflect temporary headwinds, not structural weaknesses. It was never the Company’s expectation, prior to the merger announcement, that these challenges and other headwinds would be resolved within one, two or even three quarters. Although a 74% premium to a 90-day VWAP may appear compelling when viewed in isolation, this figure is being presented without the fuller context of the Company’s long-term trajectory – context the Company itself has emphasized many times. We will continue to vote our shares AGAINST the amended merger agreement and urge all shareholders to do the same.”