Dive Brief:
- STAAR Surgical’s CEO is stepping down after the implantable eye lens manufacturer opposed a $1.6 billion takeover.
- Encouraged by activist investor Broadwood Partners, STAAR shareholders rejected Alcon’s $1.6 billion offer last week. Thursday, STAAR revealed a cooperation agreement with Broadwood that has reshaped its board.
- Stephen Farrell has left the board and will step down as CEO at the end of the month. STAAR chair Elizabeth Yeu has also left, and three people, including Broadwood’s president, are joining the board.
Dive Insight:
Broadwood built a 31% stake in STAAR and used its power to wage an extended proxy battle with the company. The dispute ended in STAAR shareholders rejecting Alcon’s offer, leading Broadwood to outline plans to push for changes to enable “effective oversight and execution” at the company. BTIG analysts said in a note to investors last week that they expected Broadwood to call a special meeting to remove STAAR directors.
STAAR has avoided the meeting by accepting board changes as part of a cooperation agreement with its activist investor. Broadwood has agreed not to push for a special meeting until at least June 18, the first anniversary of STAAR’s 2025 annual meeting of stockholders.
In return, STAAR has agreed to accept the resignations of Farrell and Yeu, increase the size of its board and support the nominations of three new directors. Neal Bradsher and Richard LeBuhn, respectively the president and executive vice president of Broadwood Capital, are two of the nominees. Broadwood Capital is the investment manager of Broadwood Partners.
Christopher Wang is the third newly nominated director. Wang is the founder of Yunqi Capital, another STAAR investor that opposed the Alcon deal.
The cooperation agreement, under which Broadwood could receive up to $6 million from STAAR, marks the swift progress of talks about the company’s board. When STAAR shareholders rejected Alcon’s offer, BTIG analysts said a prolonged fight over the company’s board and leadership could follow. The analysts warned such a fight could hamper STAAR by distracting employees.
Broadwood and STAAR agreed not to disparage each other as part of the cooperation deal, ending one source of distraction for the company. Attention can now turn to finding a new CEO and creating a strategy for STAAR as a standalone company.
BTIG analysts said last week there are limits to what STAAR management can achieve. Whatever the new leaders decide, the analysts said STAAR’s prospects are tied to the Chinese economy. The analysts regard the Chinese ophthalmic markets as “soft.”
