Solstice Advanced Materials to Acquire Element Solutions for $14.5 Billion
The specialty-materials maker's largest deal since its 2025 spin-off would nearly double annual sales to $6.8 billion and push net leverage to roughly 3.5 times at close.
Solstice Advanced Materials (SOLS) agreed to acquire Element Solutions in an approximately $14.5 billion cash-and-stock transaction, a filing that contained no second-quarter operating results and instead superseded the standalone earnings discussion that had accompanied its prior three quarterly releases.
The announcement arrives as Solstice's underlying business had begun to stabilize. Net sales grew 10% year over year to $991 million in the first quarter of 2026, with organic growth of 8%, an acceleration from 6% organic growth in the fourth quarter of 2025 and 5% in the third quarter. Adjusted EBITDA margin, which had compressed for three straight quarters — including a 662-basis-point drop to 19.1% in the fourth quarter of 2025 — recovered to 25.1% in the first quarter of 2026, still down 277 basis points from a year earlier but moving in the right direction. Net income attributable to Solstice remained under pressure, falling 37% to $85 million in the quarter after a $35 million net loss in the third quarter of 2025 and a 69% decline in the fourth.
That improving trend showed up across both of Solstice's segments. In Refrigerants and Advanced Solutions, margin compression eased to 522 basis points year over year in the first quarter, versus 1,225 basis points in the fourth quarter of 2025, as the disruptive effects of the low-global-warming-potential refrigerant transition moderated. Electronic and Specialty Materials margin turned positive, up 52 basis points year over year to 20.8%, reversing declines in each of the two prior quarters and reflecting volume growth in electronic materials. Healthcare Packaging sales, hit by customer destocking that cut revenue 25% in the fourth quarter of 2025, rose 9% year over year in the first quarter as demand patterns recovered.
The Element Solutions deal is designed to lock in that improvement at a larger scale. Solstice said the combined company would have generated approximately $6.8 billion in pro forma 2025 net sales and a 26% adjusted EBITDA margin including run-rate synergies, up from Solstice's standalone $3.9 billion in sales and 24.6% adjusted margin. Management expects the transaction to be accretive to sales growth and adjusted earnings per share in its first year, with medium-term targets of mid-to-high single-digit revenue growth, high-single-to-low-double-digit adjusted EBITDA growth, roughly 75% cash conversion, and more than $180 million in net synergies by the third year.
The deal carries a leverage cost. Combined net leverage is expected to be about 3.5 times at close, versus Solstice's standalone net leverage of 1.4 times as of March 31, 2026, with the company targeting a reduction below 3 times within 18 months.
Solstice had entered the deal with rising standalone corporate costs from its 2025 spin-off. Corporate expenses climbed roughly 63% year over year to $52 million in the first quarter of 2026, continuing a pattern seen in the two prior quarters, even as one-time standalone cost adjustments dropped to zero from $21 million a year earlier, signaling the completion of that transition. Capital expenditures also rose 32% year over year to $82 million in the quarter, following a 38% increase for full-year 2025 to $408 million. The company introduced a new Free Cash Flow measure of $124 million in its first-quarter release, replacing the cash-conversion metric used in the two preceding quarters.
Solstice reaffirmed its full-year 2026 guidance of $3.9 billion to $4.1 billion in net sales, $975 million to $1,025 million in adjusted EBITDA, and adjusted diluted earnings of $2.45 to $2.75 a share when it reported first-quarter results, unchanged from the outlook first issued alongside fourth-quarter 2025 earnings. No standalone guidance update accompanied the acquisition announcement.
The company's quarterly dividend of $0.075 a share, initiated with its fourth-quarter 2025 results as its first since the spin-off, remained in place through the first quarter of 2026.