July 6 (Reuters) – Honeywell spinoff Solstice Advanced Materials is in talks to merge with Element Solutions in a deal that could create a chemicals company valued at about $27 billion including debt, the Financial Times reported on Monday.
The talks happen as both companies seek to capitalize on growing demand for specialty chemicals used in AI data centers and semiconductor manufacturing.
Solstice and Element Solutions are discussing a merger of equals and a deal, likely to be mostly stock with some cash, could come together as soon as this week, the FT report said, citing people familiar with the talks.
No formal agreement had been reached and the discussions could still fall apart, the report said.
Neither company responded to Reuters requests for comment outside regular business hours.
Solstice, which was spun off from Honeywell last year, makes specialty chemicals and materials used in industries, including semiconductor, refrigeration, nuclear power and healthcare.
The company said in May that increasing demand for its thermal management and refrigerant products in AI-driven data centers, as well as the growing need for advanced computing solutions in semiconductor electronic materials, was helping growth.
Element Solutions, which primarily supplies specialty chemicals for electronics manufacturing, reported more than 40% growth in first-quarter revenue this year, driven mainly by AI-related demand.
Solstice has a market value of about $12.73 billion, while Element Solutions is valued at $10.63 billion, according to LSEG data.
Their shares have risen sharply this year, with Element Solutions up nearly 75% and Solstice up about 65%.
(Reporting by Sumedha Mukherjee and Shubham Kalia in Bengaluru; Editing by Subhranshu Sahu)
