Lubrizol bought by Buffett
US chemicals specialist Lubrizol has been bought by billionaire Warren Buffett through his Berkshire Hathaway Corporation.
Buffett will pay $9.7bn for the company in a cash purchase, giving shareholders $135/share - a 28% premium on the closing price before the sale announcement. The deal also includes some $700m of net debt.
The deal is seen as a positive step for both organisations as analysts saw a strong fit between Buffett's company and the Wickliffe, Ohio-based chemicals and additives producer which recently reported a 17% boost in Q4 profits as a result of an uplift in sales and tax benefits.
The acquisition is one of the largest in Berkshire Hathaway's history and Buffett has a reputation for buying positively perfoming companies that are often underpriced in the market. Analysts also pointed out that because Lubrizol is not being purchased by a competitor, there are unlikely to be any significant changes in the company's operations.
This view was supported by a statement from Buffett himself, which said: "our only instruction to James [Hambrook, Lubrizol CEO] -- just keep doing for us what you have done so successfully for your shareholders."
Although the deal has been approved by the Boards of both organisations, the final decision rests with the Lubrizol shareholders themselves.
