Buffett to acquire Lubrizol Inc. for $9B

A technician holds a sample of a fuel additive at... — A technician holds a sample of a fuel additive at the Lubrizol Corp. research lab in Wickliffe, Ohio. 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. (Feb. 20, 2001) Credit: AP

By THE ASSOCIATED PRESSMarch 14, 2011

Warren Buffett's company said yesterday it will spend about $9 billion in cash to add specialty chemical maker Lubrizol Corp. to the eclectic mix of businesses inside Berkshire Hathaway Inc.

The purchase may help satisfy Buffett's appetite for large acquisitions to boost Berkshire's earnings power, but the deal is still significantly smaller than last year's $26.7 billion acquisition of the Burlington Northern Santa Fe railroad.

"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.

Two years ago, Berkshire invested $3 billion in preferred shares of Dow Chemical to help finance Dow's $16.5 billion purchase of specialty chemical maker Rohm & Haas in 2009. That deal likely gave Buffett insight into the high-margin specialty chemical business.

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

Lubrizol, located in Wickliffe, Ohio, makes chemicals for pharmaceutical companies, fuel additives for gasoline and diesel and other ingredients for the transportation sector.

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