Activist hedge fund Starboard Value has built a stake in Honeywell spin-off Solstice Advanced Materials, pushing for improvements to boost the specialty chemicals group's share price following an aborted $14.5 billion megadeal. Starboard is pressuring Solstice to focus on execution in its core refrigerants and nuclear businesses while cutting roughly $100 million in corporate overhead. The company's stock nearly doubled after its spin-off from Honeywell last year, but most gains were erased when the $14.5 billion cash-and-stock deal to acquire Element Solutions was announced in early July.
Solstice called off the combination in late August ahead of a crucial shareholder vote after investors doubted the logic of merging two businesses with limited overlap. Shares had their worst trading day on the deal announcement and remain 26 per cent below their pre-announcement level. Starboard, with $8.2 billion under management, is among Wall Street's most formidable activist investors.
The hedge fund's founder Jeff Smith is expected to unveil the investment at the 13D Monitor Active-Passive Investor Summit. Solstice's chief executive David Sewell faces a rocky first year as activist pressure mounts. Solstice is one of few companies outside Russia and China capable of enriching uranium, which could provide significant earnings growth ahead of a 2028 US government deadline.
BMO Capital Markets analysts say the nuclear division could achieve a higher valuation as a standalone business.
Source: Financial Times Companies · Summarized by HeadlinesBriefing