Oct 15 (Reuters) - Proxy advisory firm Institutional

Shareholder Services on Wednesday recommended that investors in

Staar Surgical ( STAA ) reject an offer by Swiss eyecare giant

Alcon, putting the $1.5 billion deal in doubt.

The move marks another setback to the planned takeover,

which Staar's biggest shareholder has actively

campaigned

against. Staar shareholders are due to vote on the offer on

October 23.

ISS argued that investors should vote against the deal

given the biggest shareholder's opposition and there were

"various deficiencies, disconnects, and uncertainties"

associated with the process of reaching a deal where Alcon will

pay $28 a share.

Staar was once a high-flyer in the refractive surgery space,

producing and marketing implantable lenses for the eye. But the

company's shares have plummeted from a 2021 peak of $162 to

around $26 following a decline in revenue and a collapse of the

company's sales in China.

Staar's largest investor, Broadwood Partners, which owns

27.5% of the company, had said that the deal "sharply

undervalued" the business and was "the product of a flawed

process" suggesting Staar's management and board failed to fully

assess alternative options.

At least two other investors, Yunqi Capital and Defender

Capital, which together own 6.5% of the company, have objected

to the proposal, bringing the opposition to nearly over 35% of

outstanding shares. Alcon and Staar would need a majority of

shareholders to approve the deal next week for it to go forward.

Proxy advisory firms Glass Lewis and Egan-Jones last week

also advised shareholders to vote the deal down, citing

procedural and pricing concerns.

Opposing shareholders, burned by an over 60% decline in

Staar's shares over the last three years, have pushed for a

higher bid. They argue the company can weather short-term

turbulence and reassert its position in the Chinese market if

given the chance.

However, the market currently views that as unlikely. Staar

stock fell over 6% to $25.49 after the release of the ISS

report. The firm's recommendations often guide how investors

vote on hot-button issues.

The ISS report said that Broadwood reports that a strategic

party reached out to Staar's CEO in April "seeking to discuss a

potential transaction, but was ignored."

Broadwood says there was no need to sell the company and the

sales process was flawed, ISS wrote in its report.

"Broadwood has spoken with multiple parties that had or

continue to have interest in Staar," ISS said.

A Staar spokesman said no credible alternative bids were

received during the permitted period.