By Scott Suttell, Crain's Cleveland Business
Wickliffe, Ohio -- Berkshire Hathaway Inc. announced 14 March that it would buy Wickliffe-based speciality chemicals maker Lubrizol Corp. for $9700 million in cash.
The transaction, which has been approved unanimously by the boards of both companies, values Lubrizol at $135 per share. Lubrizol shares closed trading last Friday, 11 March, at $105.44. The purchase price represents a 28-percent premium over Lubrizol's 11 March closing price and is 18 percent higher than Lubrizol's highest ever closing price, Berkshire Hathaway said.
Lubrizol will remain at its Wickliffe headquarters and will continue to be led by its current management team, Omaha, Nebraska-based Berkshire Hathaway said.
The companies expect the transaction to be completed in the third quarter of 2011.
In polyurethanes, Lubrizol operates the Estane engineering TPU (thermoplastic polyurethanes) business, which it acquired when it bought Noveon International Inc. in 2004. Lubrizol later expanded this business significantly when it paid $61 million for Dow Chemical Co.'s TPU operation in 2009.
"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," said Warren Buffett, Berkshire Hathaway ceo, in a statement. Buffett said in the statement he had only one instruction to Hambrick: "Just keep doing for us what you have done so successfully for your shareholders."
Hambrick said the transaction "provides compelling value to our shareholders and is a clear endorsement of the growth and diversification success Lubrizol has achieved.
"We are very excited to have the opportunity to become part of the Berkshire Hathaway family," he said in a statement. "We believe its philosophy of supporting long-term global investments in technology, assets and employees will enhance execution of our growth strategies. 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."
The transaction is subject to the approval of Lubrizol's shareholders and the satisfaction of customary closing conditions. After the close of the transaction, Lubrizol will operate as a subsidiary of Berkshire Hathaway.
Lubrizol was founded in 1928. As well as the TPU businesses listed above, its technologies include lubricant additives for engine oils, other transport-related fluids and industrial lubricants, and fuel additives for gasoline and diesel fuel.
The company has about 6900 employees around the world. Lubrizol owns and operates manufacturing plants in 17 countries. Revenues in 2010 were $5420 million, an 18-percent increase from sales of $4590 million in 2009.
Lubrizol sells its products in more than 100 countries.