Buffett makes first big purchase of the year

Investment company Berkshire Hathaway, headed by billionaire Warren Buffett, announced on 14 March that it will buy speciality chemicals company Lubrizol, in one of the largest deals in the Omaha, Nebraska-based company’s history.

In a statement, Berkshire Hathaway said that the deal was valued at $9.7 billion and will be finalised by the third quarter of the year. Buffett said: “Lubrizol is exactly the sort of company with which we love to partner - the global leader in several market applications.”

Wickliffe, Ohio-based Lubrizol, which had 2010 revenues of $5.4 billion, sees most of its growth coming from emerging economies and only a third of its revenues from North America. Experts see the purchase as Buffett attempting to take further advantage of growth in emerging markets.

Lubrizol chairman, president and chief executive James Hambrick, who will continue in his position, said in a statement: “Such a long-term commitment is more important than ever in today's global economy to deliver true, market-leading products and services for our customers.”

This deal comes just a few weeks after Buffett, in his annual letter to shareholders, said that he was ready to make some new acquisitions.  As the company amassed nearly $40 billion in cash in 2010, the purchase of Lubrizol is the biggest for Berkshire since its 2009 acquisition of Burlington Northern Santa Fe for around $26 billion.

Legendary stock picker Buffett ranked third on the most recent Forbes billionaires list with an estimated fortune of $50 billion. Berkshire Hathaway reported revenues of around $136 billion for 2010, while Lubrizol had revenues of $5.4 billion.

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