Solstice Advanced Materials and Element Solutions discuss merger

In short: Solstice Advanced Materials, a former Honeywell business, is in talks to merge with Element Solutions in a deal that could value the combined group at about $27bn to $29bn.

What happened

Solstice Advanced Materials is discussing a possible “merger of equals” with Element Solutions, according to people familiar with the talks. A merger of equals means two similarly sized companies combine, rather than one clearly buying the other.

The talks are ongoing and a deal could come together as soon as this week. There is no final agreement yet, and the discussions could still end without a deal.

The Financial Times reports the transaction would likely be mostly paid in stock, with some cash. Solstice has had a strong run since it spun off from Honeywell about eight months ago. Its share price is up about 75%, giving it a market value of roughly $12.7bn. Element’s shares are up about 77% over the past year, giving it a market value of about $10.6bn.

Both companies make speciality chemicals and materials used in manufacturing. Solstice makes polymers (long-chain plastics, like the building blocks used in many industrial products) and other “process materials” used by factories. Element focuses on materials used in electronics, semiconductors (the tiny parts inside computer chips), and cars.

Why it matters

Many AI services and modern apps depend on advanced computer chips. If these two suppliers combine, it could strengthen one company’s role in providing the chemical inputs that help chip factories run, like a bigger single supplier in the parts aisle of a complex machine. It could also change competition and pricing in a supply chain that affects everything from phones to data centers.

Source: Financial Times