Berkshire Hathaway to buy Lubrizol in biggest deal to date

Warren Buffett’s firm pays US$9.7bn for US chemicals company

Berkshire Hathaway is to acquire chemicals company Lubrizol for US$9.7bn (£5.6bn) in cash, or $135 per share.

The company said the deal is one of the largest acquisitions in its history. It is paying a 28% premium over Lubrizol's closing price on 11 March.

Wickliffe, Ohio, US-based Lubrizol makes additives that improve the performance of lubricants used in engines, as well as ingredients and additives for personal care products and pharmaceuticals and specialist materials, including plastics technology and performance coatings. It reported sales of $5.4bn last year.

Warren Buffett, Berkshire Hathaway’s chief executive, 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 chief executive, James Hambrick. Our only instruction to James – just keep doing for us what you have done so successfully for your shareholders.’

Buffett founded Berkshire Hathaway in Nebraska, in the 1960s. He has said that given the company’s current scale, it is only large deals that will improve its returns to investors. The deal will add to the company’s transport-related stocks, which include aircraft company NetJets and a 9.9% stake in Chinese carmaker BYD.

Hambrick said Berkshire Hathaway’s philosophy of supporting long-term global investments in technology, assets and employees would enhance the execution of Lubrizol’s growth strategies.

The deal is subject to the approval of Lubrizol's shareholders and the satisfaction of customary closing conditions. It should be completed during the third quarter of 2011.

After the deal has been agreed, Lubrizol, which employs 6,900 people worldwide, will operate as a subsidiary of Berkshire Hathaway and remain at its headquarters and continue to be led by its current management team.

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