What was once a Paso Robles specialty chemical manufacturer is now in the ownership of business magnate Warren Buffet.
Buffett’s Berkshire Hathaway Inc. has completed its $9 billion purchase of the Ohio-based chemical maker Lubrizol Corp., which owns and operates a 60-employee plant in Paso Robles in addition to manufacturing facilities in 17 countries.
Cal Poly graduate William Frost and chemist Eugene Miller founded what was once Chemron Corp. in 1977 and opened a Paso Robles manufacturing facility in 1981 that specialized in chemicals for personal-care products, including soaps, detergents and shampoos.
By 2002, it had 100 employees and was sold to Lubrizol for approximately $60 million, Frost said.
Lubrizol’s current sale to Berkshire Hathaway crossed its last hurdle — approval by Chinese regulators —Wednesday. The acquisition required Chinese regulators to sign off because Lubrizol has facilities in China and is expanding there.
Lubrizol shareholders voted in June to support the sale at $135 per share. Berkshire also will assume about $700 million in Lubrizol debt.
Lubrizol, which produces industrial lubricants, fuel additives and ingredients for personal care products and pharmaceuticals, will join roughly 80 other Berkshire subsidiaries that include insurance, utility, clothing, furniture and manufacturing firms. The company will keep its international headquarters in Wickliffe, Ohio, and is expected to make few changes because Berkshire typically allows the companies it acquires to continue operating much as they did beforehand.
Frost, who is now president and CEO of North County chemical manufacturer Chemlogics Group, is excited to witness the evolution of the company he once hatched and is optimistic that the Paso Robles Lubrizol location will not be a casualty of the acquisition.
“This is not like some companies that, after an acquisition, are looking to see which plants live and which plants die,” Frost said, because there are not a lot of identical businesses in Berkshire Hathaway’s portfolio with which to merge the chemical supplier.
Frost said of Buffet: “He doesn’t buy much, but when he does, he keeps it. In the days when businesses get busted up or sold, it’s great to see such strong commitment.”
Lubrizol’s Paso Robles plant manager Tim Finlayson was unavailable for comment Friday.
The transaction did encounter controversy after it was revealed that former Berkshire executive David Sokol had bought nearly 100,000 Lubrizol shares for about $100 apiece in early January, when he knew Lubrizol’s board had been discussing a possible Berkshire acquisition.
Sokol, believed to have been in line to succeed Buffett as CEO, resigned after disclosing his trades to Berkshire.
Lubrizol will continue to be led by Chairman, President and CEO James Hambrick.
Founded in 1928, Lubrizol has about 7,000 employees worldwide. Its revenues for 2010 were $5.4 billion.
Lubrizol’s shares were nearly flat at $134.97 Friday afternoon.