Starboard urges Solstice to cut costs by $100 million, focus on core businesses
Key Facts
Activist investor Starboard Value is urging Solstice Advanced Materials to cut overhead costs by about $100 million and improve execution in its core refrigerants and nuclear businesses, according to a Financial Times report cited by Reuters, which quoted people familiar with the matter. The push follows Starboard's acquisition of a stake in the company, combining an investment with calls for improved operating performance. The stake is worth several hundred million dollars, according to Investing.com, citing the newspaper. The demands include more efficient management of existing businesses alongside cost cuts, after Solstice abandoned its acquisition of Element Solutions. Starboard founder and Chief Executive Jeff Smith was expected to present the investment on Tuesday at the 13D Monitor Active-Passive Investor Summit, according to the same report.
Starboard's campaign comes as Solstice's results showed an increase in corporate expenses alongside sales growth. Those expenses totaled $54 million in the second quarter of 2026, compared with $46 million in the corresponding period of 2025, according to the company's earnings statement. In the same quarter, Solstice reported net sales of $1,148 million, up 11% year on year. On earnings, the company reaffirmed its fiscal 2026 adjusted diluted earnings per share outlook of $2.75 to $2.95 when it announced the merger's cancellation. It thus maintained its annual guidance range alongside the decision to abandon the acquisition and announce a share repurchase program.
Solstice had agreed to buy Element Solutions in a cash-and-stock deal with an announced value of about $14.5 billion, according to the acquisition announcement. That value included the assumption of net debt as part of the proposed transaction. Solstice presented the deal as a way to build an integrated electronics platform spanning multiple stages of the semiconductor industry. The planned platform would have combined fabrication, packaging and assembly operations, according to the rationale the company outlined at the announcement. The acquisition also aimed to expand thermal management solutions used to cool chips and data centers. Solstice thus linked the proposed expansion to both electronics operations and cooling solutions, before the two parties later agreed to terminate the merger.
Shareholder views featured prominently in the companies' explanations for terminating the deal, with each affirming its priorities following the cancellation. Solstice Chief Executive David Sewell said in the termination statement: "We have great confidence in our strategic plan and respect the views of our shareholders." Element Solutions, for its part, described the termination as "a direct response to that feedback," referring to comments from its shareholders, according to a filing with the U.S. Securities and Exchange Commission. Element said it would continue to focus on operational excellence and prudent capital allocation. Neither party incurred a fee as a result of the termination, according to Solstice's statement, which confirmed that "no fees are payable by either party."
Alongside the announcement of the merger's cancellation, Solstice's board authorized a share repurchase program of up to $500 million. The amount sets the ceiling for the board-approved program, while subsequent purchases depend on operational, financial and market factors, according to the company's disclosure. Solstice said "the amount and timing of future repurchases may vary depending on market conditions and the levels of other operating, financing and investing activities." Following the announcement of the merger's termination and the buyback program, the company's shares rose 14% in after-hours trading on Thursday, according to coverage published by Investing.com in August. That reaction followed the acquisition and capital decisions, ahead of Starboard's current push to cut overhead costs.
On investment in its existing businesses, Solstice announced a plan ahead of Starboard's campaign to expand research and development capabilities at its facility in Buffalo, New York. The company plans to invest $49 million in the expansion, according to its statement on the project. The investment aims to support innovation in refrigerants and advanced cooling, two applications the company identified among the facility's priorities. Its scope also includes other high-growth applications, according to the statement, alongside cooling-related areas. Solstice set its next earnings release for November 4, 2026, when it will publish third-quarter figures before the market opens and hold a call to discuss them at 8:30 a.m. U.S. Eastern Standard Time.