Lubrizol Corporation (NYSE: LZ) is one comnpany we would not have really guessed as being a Warren Buffett acquisition target.  This morning came the news that Berkshire Hathaway Inc. (NYSE: BRK-A) (NYSE: BRK-B) is acquiring the specialty chemicals company for about $9 billion.  Its segments are in fuel additives, transportation-related chemicals, and fuel and engine chemicals.

The cash buyout comes to $135.00 per share and Lubrizol has traded in a 52-week range of $77.65 to $117.62.  This new buyout price represents an all-time in shares going back to before the 1990’s for the Wickliffe, Ohio-based company.  While the company will become a wholly-owned subsidiary of Berkshire Hathaway, this will run independently under its existing management team.

Revenues at Lubrizol for the last three-years were as follows: 2010 $5.417 billion; 2009 $4.586 billion; and 2008 $5.027 billion.  In those years, earnings in ‘net income’ were as follows: 2010 $732.2 million; 2009 $500.8 million; 2008 -$66.1 million.

If you include the debt on the books, the deal comes to roughly $9.7 billion.  Warren just recently said he was getting an itchy trigger finger.  This deal just came sooner than expected.

With Thomson Reuters estimates of $11.31 EPS for 2011 and $12.48 EPS for 2012, the company trades at less than 12-times this year’s expected earnings and trades at less than 11-times 2012 earnings expectations.

Buffett snuck in and snagged another low-multiple company here.  Even at all-time highs this deal hardly looks expensive for a guy who would rather pay a premium for a solid company over buying a troubled company on the cheap.

You can join our free daily email distribution list to hear more about analyst upgrades and downgrades, top day trader and active trader alerts, dividend trends, news on Buffett and other investment gurus, IPOs, secondary offerings, private equity, and more.

JON C. OGG

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.