Warren Buffett recently said that he is ready to make a big deal. This week, he proved it, making an offer to buy Lubrizol Corporation, a chemical maker that specializes in lubricants. The acquisition offer is nine billion dollars in cash. Buffet's company, Berkshire Hathaway, will also assume Lubrizol's seven hundred million dollars of debt.

Berkshire Hathaway is no stranger to mergers and acquisitions. The company owns the Burlington Northern Santa Fe railroad and the business jet fleet operator NetJets. Experts have been wondering what Berkshire would go after next, since it has over $38 billion in cash ready to spend. Lubrizol is the answer to that question.

Buffett likes to make deals decisively, and the new deal is consistent with this philosophy. Berkshire is offering $135 a share in cash, which is a 28% premium over Lubrizol's Friday closing price and a roughly 18% premium over its highest-ever closing price.

Not surprisingly, Lubrizol shares were way up, 27.73%, after the announcement, closing at $134.68.

Berkshire has made many deals, but the Lubrizol deal is its fourth largest ever. San Diego mergers and acquisitions attorneys have noted that Buffett has been moving increasingly into industrials. 

Lubrizol has consistent earnings, and made $732 million in profits last year atop $5.4 billion in revenue. The company makes lubricants for both industrial and domestic use.

The deal is scheduled to close in the third quarter of 2011, pending approval by Lubrizol shareholders.

Source: New York Times Dealb%k "Berkshire Hathaway to Buy Lubrizol for $9 Billion" 3/14/2011