Solstice Advanced Materials to acquire Element Solutions in $14.5B cash-and-stock deal

Solstice Advanced Materials (Nasdaq: SOLS) shares fell nearly 15% on Monday after the company announced a $14.5 billion cash-and-stock agreement to acquire Element Solutions (NYSE: ESI), in a deal aimed at expanding its footprint in advanced materials for electronics and AI infrastructure.

The transaction, which includes the assumption of net debt, will see Solstice acquire Element in a combination of $10.00 in cash and 0.500 shares of Solstice common stock for each Element share. The offer implies a value of approximately $50.10 per Element share and represents a premium of about 15% to Element’s closing price on July 2, 2026. Upon completion, Element shareholders are expected to own roughly 44% of the combined company.

The companies said the deal would accelerate Solstice’s strategy of building a scaled advanced materials platform with greater exposure to high-growth end markets including electronics, AI infrastructure, thermal management and data center applications.

On a combined basis, Solstice and Element are projected to generate approximately $6.8 billion in full-year 2025 net sales, with an adjusted EBITDA margin of 26% including expected synergies. Solstice said the deal would broaden its electronics capabilities, adding Element’s formulation expertise, technical services and customer relationships to its existing chemistry and materials portfolio.

“Overall, we believe the combined company will be very well-positioned to benefit from generational tailwinds in high-growth end markets,” said Solstice President and CEO David Sewell. He added that Element’s technical service model and customer relationships would expand Solstice’s ability to support clients from early-stage development through high-volume manufacturing.

Element Solutions CEO Ben Gliklich said the transaction brings together two complementary businesses with strong market positions and technical expertise, adding that the combined company would be better positioned to address emerging requirements in advanced electronics and related markets.

Strategically, Solstice said the acquisition would enhance its exposure to AI infrastructure by linking electronics and packaging capabilities with data center cooling and refrigerant application solutions. The company also highlighted its continued involvement in specialty markets, including nuclear fuel cycle-related uranium conversion services.

Financially, Solstice expects the combined company to deliver mid-to-high single-digit annual revenue growth and high single-digit to low double-digit adjusted EBITDA growth over the medium term, along with approximately $180 million in net synergies by the third year following closing. The company also anticipates around 75% cash conversion.

The deal is expected to be accretive to adjusted earnings per share in the first year after closing. Solstice projects net leverage of approximately 3.5x at completion, with a target of reducing leverage below 3x within 18 months. The company reaffirmed its commitment to maintaining a sub-investment grade credit profile and continuing dividend growth over time.

The transaction has been unanimously approved by both companies’ boards and is expected to close in the first half of 2027, subject to regulatory approvals and shareholder votes.

Solstice has secured a $4.7 billion bridge financing commitment from Goldman Sachs and plans to replace it with permanent debt financing, alongside cash on hand, to fund the cash portion of the deal.

Shares of Element Solutions were down almost 3% on the news.