Berkshire Hathaway to buy lubrizol for $9 billion
NEW YORK: Billionaire Warren Buffett's Berkshire Hathaway Inc struck a deal to buy lubricants maker Lubrizol Corp for $9 billion, betting on a global economic recovery. The deal is Berkshire's biggest since it bought Burlington Northern Santa Fe for more than $26 billion in late 2009.
It extends the trend of Berkshire expanding in basic industries, which includes Buffett's recent deals for Marmon Holdings and Israel's Iscar Metalworking. Berkshire, which had amassed about $38 billion of cash by the end of last year, will acquire Lubrizol for $135 per share, about a 28% premium to its closing price on Friday. Berkshire will also assume about $700 million of Lubrizol'sdebt .
Lubrizol's shares soared more than 27% to $133.95 in late-morning trading. Shares of NewMarket , one of the chemical company's closest competitors, were up 12%. Lubrizol makes lubricants for engines, especially large trucks, buses and boats. Demand for the company's products shouldcontinue to rise as shipping of goods increases around the world.
In February, the company posted a strong quarterly profit and issued a bullish forecast for 2011, signaling that demand for lubricants was improving along with the economy. About 65% of the company's sales were from outside North America last year. "Lubrizol is exactly the sort of company with which we love to partner ? the global leader in several marketapplications run by a talented CEO," Buffett said in a statement on Monday.
The company will continue to be led by its current management team under James Hambrick , the companies said. Just two weeks ago, Buffett told Berkshire shareholders that he was searching for new acquisitions. "Our elephant gun has been reloaded, and my trigger finger is itchy," the 80-year-old investor wrote in his annual letter. Thomas Russo , who helps invest more than $3 billion at Gardner Russo & Gardner, said he believes the investment is positioned to take advantage of increasing demand for Lubrizol's products as emerging economies around the world industrialise further.
Some 11% of Gardner Russo & Gardner holdings are invested in Berkshire shares. "It's certainly a full price ? especially if you think back what the opportunity could have been had they bought at the bottom of 2008 or 2009's market sell-off ," Russo said. "But it's all about the forward looking returns and I suspect that the rest of the
My Comments:
WB bought Lubrizol in Mid March and I think Savita Oil is an excellent pick here looking at its products and bottomline.With 71% held by promoters and 10% by corp bodies .
I am not writing more on Savita Oil and Technologies Ltd as I would like readers to find out more and take own decision.
NEW YORK: Billionaire Warren Buffett's Berkshire Hathaway Inc struck a deal to buy lubricants maker Lubrizol Corp for $9 billion, betting on a global economic recovery. The deal is Berkshire's biggest since it bought Burlington Northern Santa Fe for more than $26 billion in late 2009.
It extends the trend of Berkshire expanding in basic industries, which includes Buffett's recent deals for Marmon Holdings and Israel's Iscar Metalworking. Berkshire, which had amassed about $38 billion of cash by the end of last year, will acquire Lubrizol for $135 per share, about a 28% premium to its closing price on Friday. Berkshire will also assume about $700 million of Lubrizol's
Lubrizol's shares soared more than 27% to $133.95 in late-morning trading. Shares of NewMarket , one of the chemical company's closest competitors, were up 12%. Lubrizol makes lubricants for engines, especially large trucks, buses and boats. Demand for the company's products should
In February, the company posted a strong quarterly profit and issued a bullish forecast for 2011, signaling that demand for lubricants was improving along with the economy. About 65% of the company's sales were from outside North America last year. "Lubrizol is exactly the sort of company with which we love to partner ? the global leader in several market
The company will continue to be led by its current management team under James Hambrick , the companies said. Just two weeks ago, Buffett told Berkshire shareholders that he was searching for new acquisitions. "Our elephant gun has been reloaded, and my trigger finger is itchy," the 80-year-old investor wrote in his annual letter. Thomas Russo , who helps invest more than $3 billion at Gardner Russo & Gardner, said he believes the investment is positioned to take advantage of increasing demand for Lubrizol's products as emerging economies around the world industrialise further.
Some 11% of Gardner Russo & Gardner holdings are invested in Berkshire shares. "It's certainly a full price ? especially if you think back what the opportunity could have been had they bought at the bottom of 2008 or 2009's market sell-off ," Russo said. "But it's all about the forward looking returns and I suspect that the rest of the
My Comments:
WB bought Lubrizol in Mid March and I think Savita Oil is an excellent pick here looking at its products and bottomline.With 71% held by promoters and 10% by corp bodies .
I am not writing more on Savita Oil and Technologies Ltd as I would like readers to find out more and take own decision.
Rajeevji, I am waiting for the right time for entry. What according to you would be the right price to enter Savita Oil?
ReplyDeleteHi CC,
ReplyDeleteSavita Oil is a buy at this level.See it is not budging down and hence it will now move up on results etc...I recomended at 502 and it is now 525 , it means whatever the downside was there is over.Buy it now as per me....10-20-30 rupees here and there on a stock quoting at 500 is nothing...
Hi CC Roy,
ReplyDeleteSavita Oil touches 707 0n 13 th July and I hope you must have bot before that.
When you asked me when you should buy I told you to buy immiditaely.
Today it is 640 and even at this rate it is a buy....long way to go.....
Rajeevji
ReplyDeleteI have taken the position in the stock @ Rs.570 consequent to your recommendation. I will add on dip if any. I have also taken position in Cals Refineries after your post
CC Roy,
ReplyDeleteStock market is all about RISK.One who is able to digest this FOUR letter word always wins.
There is no margin of safety or guarentee.
I just read that Crompton and Greaves gave a dismal results and one FII sold 30 lacs shares at a stroke.
Isn't Cromption Greaves an excellent Co?If someone has invested in it before the result assuming that the result will come good, what will be his fate?
I see investor trying to find risk averse stocks but that is not possible in stock market.