WICKLIFFE, Ohio (March 14, 2011)—Berkshire Hathaway Inc. said it will buy Wickliffe-based specialty chemicals maker—and major thermoplastic polyurethanes producer—Lubrizol Corp. for $9.7 billion in cash.
Lubrizol will remain located at its Wickliffe headquarters and continue to be led by its current management team, Omaha, Neb.-based Berkshire Hathaway said. The companies expect the transaction to be completed during the third quarter of 2011.
While many of its products find use in the rubber industry, Lubrizol is best known in the business for its Estane TPUs. Originally a product of B.F. Goodrich Co., Estane is used in a variety of markets, from medical to food contact applications to construction and transportation. Lubrizol, which bought the business from Goodrich Corp. in 2004, has expanded it frequently since than and is considered the market leader in the U.S.
“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 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.
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, March 11, at $105.44. The purchase price represents a 28 percent premium over Lubrizol's March 11 closing price and is 18 percent higher than Lubrizol's all-time high closing price, Berkshire Hathaway said
Lubrizol was founded in 1928. Its technologies include lubricant additives for engine oils, other transportation-related fluids and industrial lubricants, and fuel additives for gasoline and diesel fuel.
Lubrizol has about 6,900 employees around the world. Lubrizol owns and operates manufacturing plants in 17 countries. Revenues in 2010 were $5.42 billion, an 18 percent increase from sales of $4.59 billion in 2009.
Lubrizol sells its products in more than 100 countries.