Berkshire Hathaway to buy Lubrizol for $9B in cash


OMAHA, Neb. (AP) — Warren Buffett’s company said today it will spend about $9 billion 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 purchase of specialty chemical maker Rohm & Haas. That deal likely gave Buffett insight into the high-margin specialty chemical business.

Dow paid about $16.5 billion for Rohm & Haas in 2009.

In today’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, of Wickliffe, Ohio, 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 company’s revenue grew 11 percent to $1.32 billion.

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