Billionaire Warren Buffett's Berkshire Hathaway agreed to buy chemical and lubricant maker Lubrizol for $9bn (£5.5bn) in cash, two weeks after he revealed the company's plans to use its huge cash pile on deals.
"Lubrizol is exactly the sort of company with which we love to partner," said the legendary investor.
Last month, Buffett, in his annual letter to Berkshire Hathaway shareholders, said he is looking for acquisitions as an outlet to deploy his $38bn cash pile.
Berkshire will acquire Lubrizol for $135 per share, about a 28 per cent premium to Lubrizol's closing price on Friday.
The deal, which is the largest by Berkshire in nearly six years, includes the assumption of $0.7bn of debt.
In February, Lubrizol posted strong quarterly profit and issued a bullish forecast for 2011, signalling the demand for chemicals needed to operate engines and other machinery continues to recover with the economy.
Lubrizol will continue to be led by its current management team, Berkshire said.
Citi and Evercore Partners are acting as financial advisers to Lubrizol.
City A.M. Reporter