Buffett Bags a Zebra: An Initial Look at Lubrizol Corporation

Berkshire Hathaway and The Lubrizol Corporation have announced a definitive agreement for Berkshire to acquire 100 percent of outstanding Lubrizol shares for $135 per share in an all-cash transaction. The transaction, announced before the start of trading on Monday, March 14, represents a 28 percent premium for shareholders of Lubrizol in a transaction worth $9.7 billion including the assumption of $0.7 billion in net debt. The transaction comes two weeks after Berkshire Hathaway Chairman and CEO Warren Buffett indicated that his “elephant gun has been reloaded, and my trigger finger is itchy.” Read this article for more details.

Motives Behind Value Destroying Mergers

Motives Behind Value Destroying Mergers

In recent weeks, Kraft’s proposed acquisition of Cadbury has generated a great deal of interest. When an investor with Warren Buffett’s reputation characterizes the transaction as making him “feel poorer”, observers might wonder what could possibly motivate a CEO such as Kraft’s Irene Rosenfeld to pursue such a deal. While we cannot pretend to know Ms. Rosenfeld’s motivations, there are some general observations investors can make regarding the incentive systems and motivations that make value destroying mergers and acquisitions very common. Understanding these motives can help investors avoid situations where managements seem prone to destroying value. Read this article for more details.

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