Tuesday, March 15, 2011

Lubrizol

Berkshire Hathaway is buying C & EN's 2009 Company of the Year. C & EN has the latest news with the key details.

Here are some observations:

1) does not seem like the most expensive deal in the world. In fact, Buffett does not seem comfortable in the land value with this one. Berkshire is to get the company to profit less than 13x, including net debt, Lubrizol, and less than 9X EBITDA.

2) the value does not seem to imply that there is a bidding war for the company. Perhaps this makes sense. Lubrizol is a large company, but mostly in the lubricants. Maybe that business, clinging to a large extent for the future of the internal combustion engine, not to take over the minds of large chemical companies seeking to diversify.

3) a word about the acquisition and appears to be imminent and we went out before the official announcement.

4) suggested that the acquisition of Warren Buffett, who had worked in a few weeks with his annual message to shareholders. In it, he said: "It has been shipped we have an elephant gun, and itchy trigger finger." Good metaphor, BTW. Way better than "to download the quail," an expression which is not really made sense to me. Despite being called Lubrizol Phil accordance with the criteria Berkshire is stretching it a bit. It is more like a deer or something.

Helped 5) Berkshire buy Dow Rohm and Haas. Lubrizol kind of reminds me of Rohm and Haas, in spite of all the companies mostly serve the various sectors. Both of the specialized companies that have the wind at their backs, and perhaps for different reasons. And Rohm and Haas a little more focused on technology. Lubrizol force is being well managed.

6) Warren Buffett thinks so too. "Keep on working only for us what you've done it successfully to your shareholders," said James Hambrick in the release. I've got a lump in my throat. Seriously, although it is fully approved.

Hambrick 7) and its achievements. The company came out of the crisis with strong earnings. Oversaw the acquisition and successful integration of Noveon, which helped the company diversify away from the lubricant. This in an industry where large acquisitions toward these goals often are parasites that consume the host.

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