In what can be described as one of its biggest acquisitions, Warren Buffet controlled investment firm Berkshire Hathaway has announced its decision to acquire chemicals company Lubrizol. Mr. Buffet described Lubrizol sort of company “(that) we love to partner”.
Berkshire’s offer price of $9 billion (£5.6 billion) represents a 28% premium over Lubrizol’s current market capitalisation. Mr. Buffet had told shareholders earlier this month that he wants to acquire more companies using the company’s cash reserve.
Lubrizol’s topline has been growing at a brisk pace and last year the annual earnings grew by 46% and were reported at $749 million.
“We’re prepared. Our elephant gun has been reloaded, and my trigger finger is itchy”, said Mr. Buffet in his annual letter to shareholders.
“We will need both good performance from our current businesses and more major acquisitions”, he added.
Lubrizol makes chemical used in lubricants for engine oils as well as pharmaceutical and plastic industries and reported revenues worth $5.4 billion in 2010.
Commending the company’s phenomenal growth, chief executive of Lubrizol James Hambrick said the transaction showed “a clear endorsement of the growth and diversification success” they have achieved.
The deal is expected to be closed by the third quarter of this year and is subject to Lubrizol shareholders’ approval.