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- Solstice CEO David Sewell said the company’s $14.5 billion acquisition of Element Solutions creates a “world-leading” supplier of advanced materials for semiconductors, data centers and AI infrastructure.
- After Solstice shares fell about 15% on the day of the deal announcement, Sewell said the decline was largely driven by merger arbitrage trading rather than concerns about the strategic merits of the acquisition.
Solstice Advanced Materials CEO David Sewell said Monday that Wall Street has the wrong read on its planned acquisition of Element Solutions after a bruising sell-off.
“We’re at a generational growth opportunity in semiconductors and advanced electronics,” Sewell said on CNBC’s “Mad Money” on Monday. “The combination of our two companies … gives us a comprehensive product portfolio and really a world-leading advanced materials business in semiconductors, data centers, AI.”
Solstice announced Monday that it will acquire fellow specialty chemical company Element Solutions in a cash-and-stock transaction valued at roughly $14.5 billion. Despite management’s enthusiasm for the deal, Solstice shares plunged following the announcement and closed down about 15%. Element Solutions shares fell 3%.
Sewell said he believes the sell-off in Solstice was partially driven by deep-pocketed traders making short-term bets on both stocks in the deal, rather than skepticism about Solstice’s strategy for the combination.
“We know there were a lot of hedge funds, a lot of arbitrage in there,” he said. “We’ve been telling the story. Reporting has been very positive on the strategic rationale for the deal.”
Sewell said the acquisition broadens Solstice’s exposure across the AI infrastructure supply chain, adding capabilities in semiconductor fabrication, advanced chip packaging, and thermal management. Combined with Solstice’s existing businesses serving data center cooling and nuclear power, he said the company is uniquely positioned to benefit from the rapid buildout of AI infrastructure.
“It’s a great growth proposition,” he said. “The demand is significant, and now we’ve got a complete solution in our product portfolio to help solve the biggest challenges our customers have. We know that as we execute and deliver on what we promise, the share price will follow.”
Solstice became a publicly traded company last fall, when it was spun off from Honeywell Technologies. Cramer’s Charitable Trust, the portfolio used by the CNBC Investing Club, owns shares of Honeywell. It also has Solstice on its Bullpen watch list of stocks.
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