Berkshire Hathaway to buy Lubrizol for $9B in cash

[March 14, 2011]  OMAHA, Neb. (AP) -- Warren Buffett's Berkshire Hathaway Inc. is buying specialty chemicals company Lubrizol Corp. for about $9 billion in cash, making it one of the biggest acquisitions in Berkshire's history.

The companies said Monday that the transaction also includes about $700 million in net debt. Berkshire will pay $135 per share, a 28 percent premium to Lubrizol's Friday closing stock price of $105.44.

Buffett said earlier this month he was looking for more big acquisitions to boost Berkshire's earnings power. Last year, Berkshire Hathaway acquired railroad Burlington Northern Santa Fe for more than $26 billion.

"Lubrizol is exactly the sort of company with which we love to partner -- the global leader in several market applications run by a talented CEO, James Hambrick," said Buffett in a statement.

Berkshire Hathaway, which is based in Omaha, Neb., owns roughly 80 subsidiaries, including insurance, clothing, utility, furniture, jewelry and corporate jet firms. It also has major investments in such companies as Coca-Cola Co., Washington Post Co. and Wells Fargo & Co.

Lubrizol makes chemicals for pharmaceutical companies, fuel additives for gasoline and diesel and other ingredients for the transportation sector. Last month, it reported that its fourth-quarter profit climbed 17 percent because of a $19 million tax benefit and higher sales.

The companies expect the acquisition to close in the third quarter. After the deal is complete, Lubrizol will become a Berkshire Hathaway subsidiary. It will keep its Wickliffe, Ohio, headquarters and continue to be led by current management.

Both companies' boards have unanimously approved the buyout, but it still needs the approval of Lubrizol shareholders.

[Associated Press]

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.