New spanner snarls industrial breakup machines

Element Solutions

01/09/2026 13:00

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
By Jonathan  Guilford
NEW YORK, Aug 31 (Reuters Breakingviews) - It’s getting harder for industrial titans to find the right structure. When conglomerate Honeywell HON.O split off Solstice Advanced Materials SOLS.O last year, it wasn’t enough to satisfy pushy investor Elliott Management. Independence hasn't been much easier for the separated chemicals and materials company, which just called off a $15 billion merger with Element Solutions ESI.N. The strategic complications are growing.
Before unveiling the ill-fated transaction in June, Solstice shares had soared 66% since being spun off in October. Element interrupted the momentum, with the enlargement plan costing it some 15% of its market capitalization. The premium it agreed to pay Element exceeded the value of the synergies today, as calculated by Breakingviews. In that sense, the investor reaction was perfectly understandable.
Along with tepid trading in Honeywell Technologies and Honeywell Aerospace HONA.O, all the movement has left little value created for shareholders. It’s a familiar story across the industrial sector: just look at the merry-go-round of moving parts at DuPont.
It's a different story at General Electric GE.N. Since it cleaved GE Vernova GEV.N in 2024, the turbine maker's shares have rocketed nearly 600%. Chalk it up to good timing. Its products are integral to powering AI server farms. Solstice and Element also have ways to benefit from the boom, but they might have helped sink their union.
Element’s chemicals, used in manufacturing semiconductors and high-performance computing, are in hot demand. Over less than three months, the anticipated revenue from its core Assembly Solutions unit for 2026 has increased 24%, according to Visible Alpha. For shareholders, the purchase price might have looked too low, too soon.
Solstice holds its own oddball gem: uranium hexafluoride, used to enrich fuel for nuclear plants. AI’s voracious power needs have brought a bubbly burst to companies such as $3 billion reactor designer Oklo OKLO.N. For Solstice shareholders, buying Element probably looked like an expensive and unrelated encumbrance that diluted their ownership to 56% of the combined company.
These realizations, albeit belated, may help explain the seemingly amicable uncoupling by Solstice CEO David Sewell and his Element counterpart Benjamin Gliklich. Such mutual breakups occur less than 1% of the time, according to one academic study. The outcome is also a reminder about the many challenges of finding the key to "unlock" value. Some 55% of big spinoffs generate negative shareholder returns for both the new company and its former parent three years later, consulting firm McKinsey found. AI may be fool's gold for CEOs seeking riches in financial engineering.
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CONTEXT NEWS
Solstice Advanced Materials and Element Solutions said after the market closed on August 27 that they had mutually agreed to terminate their planned $14.5 billion merger. No fees will be payable by either party.
Solstice's share price closed about 16% higher on August 28, at $63.53, after falling 15% on July 6, when the deal was initially announced.

(Editing by Jeffrey Goldfarb; Production by Pranav Kiran)
((For previous columns by the author, Reuters customers can click on GUILFORD/ Jonathan.Guilford@thomsonreuters.com))