Mizuho cuts Element Solutions stock rating on acquisition concerns

Mizuho cuts Element Solutions stock rating on acquisition concerns

US futures rise on cooling rate fears, strong earnings; Iran strikes continue Investing.com - Mizuho downgraded Element Solutions (NYSE:ESI) to Neutral from Outperform on Wednesday and lowered its price target to $45 from $54. The downgrade follows the announcement that SOLS will acquire Element Solutions in a cash and stock transaction. Since the deal was announced, Element Solutions shares fell 7% while SOLS declined 21%, compared with a 1% gain in the S&P 500.

Mizuho said the combined company will resemble pre-spin DuPont, with a diversified portfolio spanning electronics and industrial end-markets. The firm noted that Element Solutions investors may have been hoping for a path to pure-play electronic chemicals, while SOLS investors may have been hoping for a different strategic outcome. The firm said it sees limited operational dis-synergies but believes any portfolio separation is more likely to be a longer-term decision.

Mizuho also sees a low probability of a third-party bid for the company. The new $45 price target harmonizes with Mizuho’s lowered $70 price target for SOLS. In other recent news, Solstice Advanced Materials announced a definitive agreement to acquire Element Solutions in a cash-and-stock transaction valued at approximately $14.5 billion, which includes the assumption of net debt.

Under the terms of the agreement, Element Solutions shareholders will receive $10.00 in cash and 0.500 shares of Solstice common stock for each Element share, representing a premium of about 15% over Element’s recent closing share price. Following this announcement, Truist Securities upgraded Solstice Advanced Materials to a Buy rating from Hold, citing a buying opportunity due to a post-merger announcement decline in the company’s shares. Conversely, Freedom Broker downgraded Element Solutions to Hold from Buy and lowered its price target, reflecting concerns over the modest premium offered in the acquisition.

Despite this, BMO Capital reiterated an Outperform rating on Element Solutions, maintaining a $45.00 price target after the company’s investor day. Additionally, Element Solutions declared a quarterly cash dividend of $0.08 per share, payable to stockholders of record as of June 1, 2026. These developments provide investors with insights into the evolving landscape for both companies.