Solstice Advanced Materials, the chemicals company spun off from Honeywell last week, said Monday it would buy chip-materials maker Element Solutions in a cash-and-stock deal valued at $14.5 billion, thrusting the newly independent firm into the race to supply materials to artificial-intelligence data centers.
The transaction is Solstice's first major move since Honeywell completed the breakup that also produced a standalone aerospace company, and it repositions the former Honeywell unit around semiconductors, thermal management and data-center cooling rather than the refrigerants and industrial gases that anchored its legacy portfolio.
Element shareholders will receive $10 in cash and 0.500 shares of Solstice for each share held, an implied value of $50.10 a share and a premium of nearly 15 percent to Element's last close, the companies said. Solstice shares fell nearly 13 percent Monday, CNBC reported, and had dropped about 20 percent through Tuesday, according to Semafor. Element shares slid 2.1 percent.
The financing
Solstice will fund the purchase with stock, new debt and cash on hand and has secured a $4.7 billion bridge commitment from Goldman Sachs, the company said. Chief Executive David Sewell told analysts on a conference call that the combination should generate more than $180 million in annual cost savings within three years of closing and would expand the company's reach in semiconductor and electronics markets. The combined business will operate under the Solstice name, and Sewell will continue to lead it.
The bet
Element's electronics-chemicals portfolio, used in semiconductor manufacturing and printed-circuit-board production, would join Solstice's refrigerants, specialty materials and uranium-conversion and nuclear-services businesses. Sewell said on the call that the uranium unit positions the company to benefit from the surge in electricity demand tied to AI data-center expansion.
Honeywell Aerospace, the other half of the split, has fallen 10 percent since the spinoff took effect last week. Aerospace Chief Executive Jim Currier said the standalone company was now "free to focus on its singular strategy" of building hardware for commercial and defense customers.
The counter
The spinoff playbook Honeywell is running is harder to reproduce than it looks. Harvard Business Review research cited by Semafor found that half of 350 corporate spinoffs of more than $1 billion between 2000 and 2020 failed to create shareholder value within two years, and another quarter destroyed value outright. No dissenting take from Element shareholders, antitrust regulators or short-sellers had surfaced by press time.
Solstice and Element expect the transaction to close in the first half of 2027, subject to shareholder and regulatory approval.