Why SOLS Stock Is Rising Over 2% In Overnight Trading

• Starboard Value has become one of Solstice's 10 largest shareholders.

• Solstice scrapped its planned $14.5-billion acquisition of Element Solutions in August after investors raised concerns.

• Starboard sees growth potential in Solstice's nuclear business as AI boosts electricity demand.

Solstice Advanced Materials (SOLS) stock climbed 2% overnight as activist investor Starboard Value reportedly built a stake and is pushing for a turnaround, including $100 million in cost cuts. The fund also sees upside in Solstice's nuclear business as AI-related electricity demand fuels interest in nuclear power.

Solstice Advanced Materials stock ended Monday's session 2% higher and is on track for a green month with over a 7% rally so far.

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Starboard Builds Stake In Solstice

According to a Financial Times report, Starboard has accumulated a stake in Solstice, making it one of Solstice's 10 largest shareholders.

Starboard also wants the specialty chemicals company to cut overhead by about $100 million and improve performance in its refrigerants and nuclear operations after it scrapped its plan to acquire Element Solutions.

Starboard manages approximately $8.2 billion and has previously pursued activist campaigns involving companies including Bristol Myers Squibb, Salesforce and Dynatrace.

Solstice's Acquisition Fallout Weighs On Investor Confidence

Solstice called off its planned $14.5 billion purchase of Element Solutions in August after investors raised concerns about the deal's price and benefits. They questioned whether combining two businesses with few shared operations was worth the cost.

Solstice announced its plan to buy Element Solutions in a cash-and-stock deal back in July. While Solstice produces materials such as polymers and performance fluids, Element makes specialty chemicals used in industries including electronics and semiconductors.

The July deal announcement erased much of Solstice's earlier share-price gains after its separation from Honeywell International Inc. (HON) in October last year.

Solstice's Nuclear Operations Offer A Potential Growth Driver

The report said Starboard sees opportunities in Solstice's uranium-related operations as electricity consumption rises with expanding AI infrastructure. The company's nuclear business supplies a chemical used in uranium enrichment, an important stage in the nuclear fuel supply chain.

The business could benefit from efforts to expand nuclear energy capacity and a 2028 U.S. government deadline to end imports of Russian enriched uranium. Earlier this month, analysts at Seaport Research started coverage of Solstice Advanced Materials with a 'Buy' rating and a price target of $80, describing it as a company with strong long-term growth potential. The analyst cited rising demand for climate-friendly refrigerants, advanced computing and data center materials, and Solstice's position as the only U.S.-based provider of uranium conversion services as key growth drivers.