UpdateUS Lubrizol to be acquired by Berkshire Hathaway for $9.7bn

14 March 2011 12:15  [Source: ICIS news]

Lubrizol CEO James HambrickLONDON (ICIS)--Lubrizol is to be acquired by Warren Buffett's investment vehicle Berkshire Hathaway for approximately $9.7bn (€7.0bn), the US-based specialty chemicals firm said on Monday.

Berkshire Hathaway will acquire 100% of outstanding Lubrizol shares for $135 per share - which equates to about $9bn - in an all-cash transaction, Lubrizol said in a statement.

The transaction, which was unanimously approved by the board of directors of each company, includes around $700m in net debt.

The $135 per share price represents a 28% premium over Lubrizol's closing price on Friday 11 March 2011, and is 18% higher than Lubrizol's all-time high share closing price, Lubrizol said.

Berkshire Hathaway and Lubrizol expect the transaction, which is still subject to shareholder approval, to be completed during the third quarter of 2011.

"This transaction provides compelling value to our shareholders and is a clear endorsement of the growth and diversification success Lubrizol has achieved,” said James Hambrick, Lubrizol chairman, president and CEO.

“Such a long-term commitment is more important than ever in today's global economy to deliver true market-leading products and services for our customers," he added.

Berkshire Hathaway CEO Warren Buffett said: "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."

After the transaction is completed, Lubrizol will operate as a subsidiary of Berkshire Hathaway. It will remain located at its US headquarters in Wickliffe, Ohioand will continue to be led by its current management team.

The deal is one of the largest acquisitions in Berkshire Hathaway’s history.

In February, Lubrizol announced that it expects volume growth of 4-5% in 2011, coming after a double-digit volume rebound in 2010.

Lubrizol’s additives business is expected to increase volumes by “a more normal” 2-3% this year, with growth being driven primarily by Asia, while the group’s advanced materials segment is expected to increase volumes by about 6%, a projection that did not include the acquisition of Nalco’s performance products group in January for $166m.

At the company’s 2010 fourth-quarter results conference in February, Lubrizol reported a 17% increase in fourth-quarter net income, to $157m from $134m in the same three-month period in 2009, as a result of higher volumes and prices.

($1 = €0.72)


By: Franco Capaldo
+44 (0)20 8652 3214



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