Hunter Buffett bags chemical firm for $12.2b

Just two weeks after telling his shareholders he had "reloaded" his "elephant gun" and was on the hunt for acquisitions, Warren Buffett's Berkshire Hathaway bagged one of the biggest takeovers in its history - a US$9 billion ($12.2 billion) purchase of the industrial lubricants giant Lubrizol.

The deal, which also sees Berkshire Hathaway take on US$700 million debt, shifts Buffett's company away from its focus on insurance businesses and into basic industries. It comes after acquisition of railroads company Burlington Northern and purchases of metalworking and manufacturing businesses.

"Lubrizol is exactly the sort of company with which we love to partner," said Buffett, "the global leader in several market applications run by a talented chief executive, James Hambrick."

Lubrizol is based in Ohio and employs 6900 staff worldwide, making products that range from additives for engine oils to ingredients for shampoo. It was founded in 1928 and has annual sales of US$5.4 billion. Berkshire Hathaway's takeover is pitched at a 28 per cent premium to last week's Lubrizol share price.

Thomas Russo, a fund manager at Gardner Russo & Gardner, said: "It's certainly a full price - especially if you think back to what the opportunity could have been had they bought at the bottom of 2008 or 2009's market sell-off, but it's all about the forward-looking returns and I suspect that the rest of the world's demand for the products will grow."

Buffett warns Berkshire Hathaway shareholders the company will find it harder to achieve the stellar growth of earlier years, now it has become one of the top 10 biggest companies in the US.

- Independent