Buffett's Berkshire To Buy Lubemaker Lubrizol For $9B

Berkshire Hathaway Inc. will acquire lubricant maker Lubrizol Corp. for $9 billion in cash as part of its expansion program, which would the company to tap rising demand for chemicals used in engines and machinery, billionaire Warren Buffett said.

Billionaire Warren Buffet on Monday revealed plans to buy lubricant maker Lubrizol Corp. for $9 billion in cash, which would allow his company Berkshire Hathaway Inc. to tap the rising demand for chemicals used in heavy machinery and engines.

In a statement issued on Monday, Buffett said that under the terms of the deal, Lubrizol will continue operations under its current management team led by James Hambrick.

Buffett said that Berkshire will acquire Lubrizol for $135 per share or 28 percent premium to its closing price during Friday’s trading.

Berkshire, according to Buffet, will also assume some $700 million worth of Lubrizol debts.

Lubrizol is popular among truck and boat enthusiasts for its engine lubricants.

In February, Lubrizol posted strong quarterly profit and issued a bullish forecast for 2011, signaling demand for lubricants continues to recover with the economy.

The 80-year-old investment mogul said that Berkshire was able to amass some $38 billion worth of cash by the end of last year, saying that he plans to use the huge cash pile for the acquisition.

"Our elephant gun has been reloaded, and my trigger finger is itchy," Buffet said in his letter to Berkshire shareholders.

Acquiring Lubrizol is the biggest deal for Berkshire since it bought Burlington Northern Santa Fe for over $26 billion in 2009. Also, the company has recently closed a deal with Marmon Holding and Israel’s Iscar Metalworking, which extended Berkshire’s reach in basic industries.

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