Posted on 03/14/2011 9:11:08 PM PDT by bruinbirdman
Billionaire investor Warren Buffett has agreed to pay $9bn (£5.6bn) in cash for US chemicals maker Lubrizol, making good on a pledge that he was on the hunt for big acquisitions.
Mr Buffett's Berkshire Hathaway company offered $135 a share for Lubrizol, which is based in Ohio but has factories in almost 20 countries. The company expanded into Britain in the 1930s in its first venture outside the US.
The deal follows Mr Buffett's near-$30bn acquisition in late 2009 of Burlington Northern Santa Fe, one of America's biggest railroad companies. The decision also underlines the billionaire's appetite for buying American companies.
Founded a year before Wall Street's crash in 1929, Lubrizol's principal business is the manufacture of additives that improve the performance of lubricants used in engines. It had $5.4bn sales last year.
Mr Buffett, who turned 80 last year, said: "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. Our only instruction to James – just keep doing for us what you have done so successfully for your shareholders."
Berkshire's offer represents a 28pc premium to Lubrizol's closing price on Friday and is 18pc higher than its previous all-time high.
Lubrizol shares jumped $29.01 to $134.45. Berkshire fell 1.55pc to $126,015.
Having founded Berkshire in Omaha, Nebraska, in the early 1960s, Mr Buffett has admitted that given the company's scale, it is only large deals that will improve the company's returns to investors.
In his annual letter to shareholders last month, he said that the majority of Berkshire's $38bn in cash was sitting in US Treasury bills earning very little in interest.
"He has a burden of deploying capital," Thomas Russo, a partner at Berkshire investor
(Excerpt) Read more at telegraph.co.uk ...
Buffet getting rid of some Cash. A clear indication he thinks the dollar is overvalued. Lubrizol is another pick and shovel company with proven profits that will beat inflation.
but then again...he probably sits at Obambi’e round table and advises him to kick off QE3 as soon as possible
Pretty smart deal, Lubrizol makes stuff that makes oil work better - can’t see the end of demand for that.
Buffett getting ready to get some sweet deal from the US govt...
More like an indication of mortality.
BH has been a growth company since its founding and control by Buffett.
He knows that his gifts to charity can only be realized by the recipient if they are sold. They are obligated to disperse at least 5% of their endowment per annum. So Warren is planning an alternative.
Buffett is setting up BH to be a dividend payer, an income equity, after his demise. The holders (trust) can disperse the dividends. Why? Because there is only one Buffet. No one will be able to grow the company like him. He's setting it up so that each giant part of Birkshire Hathaway will manage itself.
yitbos
This just in !!!!
Warren Buffet buys more lube!
Maybe he knows something about how the IRS may become more relentless in their pursuit of tax dollars.
Time for us to bend over and grab our ankles.
And alternative explanation would be that cash does not bring any profit.
Which one is likelier do you think?
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