Warren Buffet's Lubrizol to buy two units of Weatherford for $750 mn
02 December 2014
Lubrizol Corp, the portfolio company of Warren Buffet's investment arm Berkshire Hathaway Inc, yesterday agreed to buy the oilfield chemicals and the drilling fluids business of British oilfield services provider Weatherford International, for $750 million in cash.
The purchase price includes an additional $75 million based on post-closing performance of the businesses.
The sale is part of Weatherford's plan to divest non-core businesses and reduce its debt. The company has raised about $1.8 billion from divestitures this year and expects its net debt to be between $6.6 billion and $6.8 billion at year-end.
Weatherford's oilfield chemicals business, known as Engineered Chemistry, supplies additives and fluids for a range of oilfield activities, including cementing, drilling, flow assurance and fracturing. It offers chemistry expertise to solve problems throughout the oil and gas drilling process.
The business, based in Houston, Texas, operates 10 sites located predominantly in North America.
Its drilling fluids business, known as Integrity Industries, manufactures drilling fluid systems, including diesel, mineral oil and synthetic oil based fluids. The company supplies these drilling fluid systems to retail drilling fluid companies.
The business is based in Kingsville, Texas, and operates in 14 locations.
Post closing, expected by the end of the year, Engineered Chemistry and Integrity Industries, along with Lubrizol's energy and water business and Lubrizol Specialty Products, will become a new business segment for Lubrizol.
The new segment, Lubrizol Oilfield Solutions, will join Lubrizol's other business segments, Lubrizol Additives and Lubrizol Advanced Materials. Within this new segment, Engineered Chemistry and Integrity Industries will operate independently.
The acquisitions of these two businesses will give Lubrizol a more significant footprint in the $20-billion oilfield chemicals business.
''This proposed acquisition provides us a new growth platform as we build out a multi-billion business in specialty chemicals and drilling fluids for the oilfield space,'' said James Hambrick, Lubrizol chairman, president and CEO.
''With the addition of the companies' technologies, combined with improved fluid formulation and applications knowledge, Lubrizol will be better positioned to innovate more quickly and become a solutions provider for both multinational oilfield service companies as well as more regional customers which have a significant share of the North American market,'' he added.
Founded in 1928, Lubrizol produces and supplies technologies to customers in the global transportation, industrial and consumer markets. These technologies include lubricant additives for engine oils, driveline and other transportation-related fluids and industrial lubricants, as well as additives for gasoline and diesel fuel.
The Ohio-based company also makes ingredients and additives for home care and personal care products and pharmaceuticals, and specialty materials, including plastics technology and performance coatings in the form of specialty resins and additives.
Lubrizol owns and operates manufacturing facilities in 17 countries, employs 7,500 people worldwide and has annual sales of $6.4 billion.