Solstice and Element Solutions Call Off $14.5 Billion Merger as Solstice Authorizes $500 Million Buyback

by Sofia Lindqvist · August 28, 2026

Markets Writer, The SmallCap Signal

Solstice Advanced Materials and Element Solutions Inc have abandoned the merger that would have joined them into a single advanced-materials company, unwinding a transaction that was valued at roughly $14.5 billion when it was unveiled seven weeks ago.

Solstice disclosed the mutual termination in a press release issued from Morris Plains, New Jersey, on Thursday, Aug. 27, at 5:00 p.m. ET — after the close of regular US trading. The release states that the boards of both companies agreed to end the merger agreement and that no fees are payable by either party. Dr. Rajeev Gautam, chairman of Solstice's board, is quoted in the release saying that, following conversations with shareholders and discussions between the parties, both boards unanimously believe terminating the merger agreement is in the best interests of their respective shareholders, employees and customers.

Element Solutions, which trades on the New York Stock Exchange under the ticker ESI, announced the mutual termination the same day, according to the mergers and acquisitions news feed maintained by the filings service StockTitan, which listed the item at 5:00 p.m. ET under a headline describing a mutual termination of the merger agreement with Solstice Advanced Materials. Solstice trades on the Nasdaq under the ticker SOLS. This desk did not review Element Solutions' own termination release directly.

What the two companies walked away from

The transaction was announced on July 6, 2026. Element Solutions' Form 8-K describing the deal, as summarized by StockTitan, valued the combination at approximately $14.5 billion including assumed net debt, with Element Solutions shareholders due to receive $10.00 in cash plus 0.500 Solstice shares for each Element Solutions share — consideration the summary put at roughly $50.10 per share. Element Solutions holders were expected to own about 44 percent of the combined company.

That same summary described a combined business with approximately $1.7 billion of EBITDA for fiscal 2025 and a 26 percent adjusted EBITDA margin inclusive of expected run-rate synergies, and management guidance of more than $180 million in annual net synergies by the third year. Those were company projections attached to a deal that will now not be completed, and the EBITDA and margin figures are non-GAAP measures.

The deal was structured for a long timeline. A Form 425 filed on July 6, 2026, again as summarized by StockTitan, set an outside date of July 6, 2027, extendable to Jan. 5, 2028 under specified circumstances, and conditioned closing on shareholder approvals at both companies, effectiveness of a Form S-4 registration statement, a Nasdaq listing approval and expiration of waiting periods under the Hart-Scott-Rodino Act. The merger had been intended to qualify as a reorganization under Section 368(a) of the tax code. None of those steps will now be required.

The merger agreement was not fee-free in every scenario. The same Form 425 summary sets out reciprocal termination fees of $376 million payable by Element Solutions and $385 million payable by Solstice, rising to $513 million for Solstice in a scenario tied to a failure of the tax opinion. Those provisions are what makes the companies' statement that no fees are payable on this mutual termination a substantive point rather than a formality: a walk-away negotiated by both boards avoided fees that a unilateral exit could have triggered.

Solstice pivots to buybacks and reaffirmed guidance

Alongside the termination, Solstice said its board has authorized a new $500 million share repurchase program. The company framed the authorization as a signal of board and management confidence in its standalone strategy and its commitment to disciplined capital allocation. David Sewell, Solstice's president and chief executive, is quoted in the release saying the company's cash flows and balance sheet are strong, enabling both investment in its organic growth opportunities and meaningful capital returns. Sewell is also quoted saying that while Solstice viewed the Element acquisition as an opportunity to accelerate its strategy, the company has confidence in its strategic plan and respects its shareholders' views — language that, alongside the chairman's reference to conversations with shareholders, points to investor resistance as a factor in the outcome.

Solstice also reaffirmed its 2026 outlook in the same release. For the full year the company pointed to net sales of $4,125 million to $4,185 million, adjusted EBITDA of $1,035 million to $1,055 million, adjusted diluted earnings per share of $2.75 to $2.95, and capital expenditures of $420 million to $440 million. For the third quarter of 2026 it guided to net sales of $990 million to $1,030 million. Adjusted EBITDA and adjusted diluted EPS are non-GAAP measures; the release did not present corresponding GAAP forecasts.

The company's stated strategic case for going it alone rests on what it calls highly differentiated technology and a business aligned with secular growth trends it identified as AI, data centers, nuclear energy, thermal management and semiconductor manufacturing. Those characterizations are the company's own and are self-reported.

Element Solutions on a standalone basis

Element Solutions enters the post-deal period having reported record second-quarter results. In a July 27, 2026, release distributed by Business Wire, the company reported second-quarter net sales of $977.9 million, GAAP net income of $77.3 million and GAAP diluted earnings per share of $0.32. On a non-GAAP basis it reported adjusted EBITDA of $183.5 million and adjusted earnings per share of $0.47, with organic net sales growth of 15 percent.

In that same July release, Element Solutions guided to full-year 2026 adjusted EBITDA of $690 million to $710 million and adjusted EPS growth of approximately 20 percent, both non-GAAP measures, with third-quarter adjusted EBITDA of approximately $180 million. The company noted that GAAP reconciliations for forward-looking guidance were omitted under SEC rules because certain adjustment items are difficult to forecast.

Chief Executive Benjamin H. Gliklich used the July results release to say the proposed Solstice transaction was intended to accelerate value creation by forming a stronger, more differentiated electronics portfolio and unlocking compelling synergies, and the company then described the merger as expected to close in the first half of 2027, subject to customary closing conditions and regulatory approvals. That framing has been overtaken by Thursday's termination.

Timing and market context

Because Solstice's announcement landed after Thursday's close, any price reaction falls into Friday's session, which is still open as this article is published. The last completed session was Thursday, Aug. 27, when the S&P 500 closed at 7,730.99, up 55.29 points or 0.7 percent; the Dow Jones Industrial Average at 53,569.44, up 105.56 points or 0.2 percent; the Nasdaq composite at 26,541.35, up 411.16 points or 1.6 percent; and the Russell 2000 at 3,014.34, up 8.44 points or 0.3 percent, according to the Associated Press market wrap.

For shareholders of both companies, the practical effect of the termination is that a multi-quarter regulatory and proxy process comes off the calendar, and each company's results will be measured against its own standalone guidance rather than against merger arithmetic. A terminated merger also removes the basis for the arbitrage positioning that typically builds around an announced cash-and-stock deal.