Starboard targets Solstice with $100 million cost-cut push after failed deal - FT

Activist investor Starboard Value has built a stake worth several hundred million dollars in Solstice Advanced Materials (NASDAQ:SOLS) and is pushing the speciality chemicals maker to cut costs and focus on its core businesses after an aborted $14.5 billion acquisition deal, the Financial Times reported on Tuesday.

Starboard wants Solstice to reduce corporate overhead by about $100 million and improve execution in its refrigerants and nuclear businesses, according to people familiar with the matter cited by the FT.

The activist investor also sees scope for growth in Solstice's nuclear operations as rising electricity demand from artificial intelligence data centres fuels interest in nuclear power.

Solstice produces chemicals used in air conditioning, insulation and refrigeration, alongside materials for electronics and semiconductors. Its nuclear division supplies a chemical used in uranium enrichment, placing it within a supply chain that could benefit as countries seek to expand nuclear power capacity.

Solstice called off its planned combination with Element Solutions in late August, ahead of a crucial shareholder vote, after investors questioned the strategic rationale for merging businesses with limited overlap.

The $14.5 billion cash-and-stock proposal also raised concerns about Solstice's capital allocation, as it would have required the company to pay a higher earnings multiple for Element than its own market valuation, the FT reported.

Solstice shares nearly doubled after the company separated from Honeywell last October, but gave back most of those gains after the acquisition was announced in early July.

Starboard founder and Chief Executive Jeff Smith was expected to outline the investment at the 13D Monitor Active-Passive Investor Summit on Tuesday. The fund manages $8.2 billion and has previously targeted companies including Bristol Myers Squibb, Salesforce and Kenvue.

Solstice is among a small number of companies outside Russia and China capable of carrying out the initial stage of uranium enrichment, the FT reported. The business could benefit from a U.S. government deadline in 2028 to end imports of Russian enriched uranium.