Buffett pays US$9b cash for Lubrizol
Source: Agencies |
March 15, 2011, Tuesday
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Print Edition
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WARREN Buffett's Berkshire Hathaway Inc is buying specialty chemicals company Lubrizol Corp for about US$9 billion in cash, making it among Berkshire's biggest acquisitions.
The companies said yesterday that the transaction also includes about US$700 million in net debt. Berkshire will pay US$135 per share, a 28 percent premium to Lubrizol's closing stock price of US$105.44 on Friday.
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 US$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," Buffett said in a statement.
Lubrizol makes chemicals for pharmaceutical companies, fuel additives for gasoline and diesel and other ingredients for the transport sector. Last month, it said its fourth-quarter profit climbed 17 percent because of a US$19 million tax benefit and higher sales. Its revenue grew 11 percent to US$1.32 billion.
Berkshire Hathaway 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.
Buffett, whose investing decisions are carefully scrutinized by the world of finance, said earlier this month that while he's interested in making acquisitions, it's hard to find big businesses that fit into Berkshire Hathaway well. He also noted that businesses that do appeal to him usually aren't selling at the right price.
The companies said yesterday that the transaction also includes about US$700 million in net debt. Berkshire will pay US$135 per share, a 28 percent premium to Lubrizol's closing stock price of US$105.44 on Friday.
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 US$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," Buffett said in a statement.
Lubrizol makes chemicals for pharmaceutical companies, fuel additives for gasoline and diesel and other ingredients for the transport sector. Last month, it said its fourth-quarter profit climbed 17 percent because of a US$19 million tax benefit and higher sales. Its revenue grew 11 percent to US$1.32 billion.
Berkshire Hathaway 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.
Buffett, whose investing decisions are carefully scrutinized by the world of finance, said earlier this month that while he's interested in making acquisitions, it's hard to find big businesses that fit into Berkshire Hathaway well. He also noted that businesses that do appeal to him usually aren't selling at the right price.
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