Berkshire Hathaway is to buy specialty chemicals company Lubrizol in a deal worth $9.7bn, one of the largest acquisitions in the investment holding company’s history.
The deal will see Berkshire Hathaway take on 100 percent of Lubrizol’s shares for $135 per share. This price represents a 28 percent premium over Lubrizol’s closing share price on Friday, the companies claimed.
Subject to the approval of Lubrizol’s shareholders and the usual antitrust regulations, the deal is expected to close in the third quarter of 2011.
According to Berkshire Hathaway CEO Warren Buffet, Lubrizol, which offers specialty chemicals for the consumers goods, transportation and industrial markets, is the perfect partner company.
“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,” he said.
Lubrizol CEO James Hambrick said the acquisition is a ‘clear endorsement of the growth and diversification success Lubrizol has achieved’ and said it would help drive future growth.
“We believe its [Berkshire Hathaway's] philosophy of supporting long-term global investments in technology, assets and employees will enhance execution of our growth strategies,” he said.
After the close of the transaction, Lubrizol will operate as a subsidiary of Berkshire Hathaway, but will remain under the direction of its current management team.
Acquisition of Nalco’s personal care business
Lubrizol itself recently acquired the performance products division of Nalco, in an attempt to strengthen its personal care business.
The acquisition closed in January this year, and the Ohio-based chemicals firm said it expected the acquisition to expand the strategic portfolio of its Noveon Consumer Specialties Home and Personal Care product line.
"The joining of our two personal care product lines creates a portfolio of industry-leading technologies that will help make our combined customers more successful through expanded access to innovative ingredients, formulations and applications knowledge," commented president of Lubrizol Advanced Materials, Eric Schnur, at the time of the acquisition.