Warren Buffett, also known as the Oracle of Omaha, has calmed his itchy trigger finger by shootingÂ atÂ Lubrizol. TheÂ chemical company that specializes in lubricants, polymers, and plastics is in for a $9.7-billion acquisition by Buffett’s company, Berkshire Hathaway.
In 2010, Lubrizol earned approximately $750 million on $5.4 million in sales.Â Much has been made of Lubrizol’s dominant role in the lubricant and fuel additives industry. As Joanna Slater of Canadian newspaper The Globe and Mail explains:
Lubrizol, which had $5.4-billion in revenue last year, is a classic Buffett-style target: a company that isnâ€™t a household name playing a major role in an unglamorous but lucrative business. Most of Lubrizolâ€™s revenues come from chemicals that boost the performance of fuels and lubricants in everything from cars to industrial machinery.
But it looks like Buffett and the rest of Berkshire Hathaway are also getting a portfolio rich in polymers and plastics.Â According to the news release put out by Lubrizol, besides lubricants and fuel additives, the company also heavily involved in manufacturing, including:
…ingredients and additives for personal care products and pharmaceuticals; specialty materials, including plastics technology; and performance coatings in the form of specialty resins and additives.
A quick sampling of the company’s website reveals that Lubrizol has interests in:
- plastic additives for coating applications
- thermoplastic polyurethanes which have a number of applications, includingÂ tubing for medical devices and in industrial equipment for cables and belts
- chlorinated polyvinyl chloride out of which parts of jacuzzis and pools parts are made
- conductive polymers for electronic applications
Reuters reported on Tuesday that the Lubriziol revealed in its filing with the Securities and Exchange Commission (SEC) that it would have to pay a $200 million break-up fee if it receives a superior bid and walks away from the Berkshire Hathaway deal.
Source: Berkshire buying Lubrizol for $9b, Boston Globe, 03/15/2011
Source: Buffettâ€™s Berkshire nabs Lubrizol for $9-billion, The Globe and Mail, 03/14/2011
Source: Berkshire Hathaway To Buy Lubrizol, Chemical and Engineering News, 03/14/2011
Source: Lubrizol deal has $200 mln break-up fee, Reuters, 03/15/2011
Source: Deal ‘Itch’ Gets Scratched, Wall Street Journal, 03/15/2011
Image provided by Medill DC, used under its Creative Commons license.
Rajendrani "Raj" Mukhopadhyay is a science writer and editor who contributes news stories and feature articles on scientific advances to a variety of magazines. Raj holds Ph.D. in biophysics from Johns Hopkins University.