11:16 AM | December 31, 2013 | Francinia Protti-Alvarez
Berkshire Hathaway (Omaha, NE) is acquiring Phillips Specialty Products Inc. (PSPI; Houston), a flow improver business, from Phillips 66 (Houston), Phillips 66 announced. In exchange for the share capital of PSPI, a wholly owned subsidiary, Phillips 66 will receive Phillips 66 common stock currently held by Berkshire Hathaway, the company says. The specific number of shares will be determined by the share price at deal closing. The enterprise value of the deal is estimated at almost $1 billion, reports say.
“Berkshire Hathaway made a strong offer for our high-performing flow improver business. This transaction optimizes our portfolio and focuses growth on our midstream and chemicals businesses,” says Greg Garland, chairman and CEO of Phillips 66.
PSPI specializes in developing and manufacturing polymers that maximize the flow potential of pipelines carrying crude oil or refined products. The transaction forms part of Phillips 66’s ongoing portfolio management, the company says.
“The flow improver business is a high-quality business with consistently strong financial performance, and it will fit well within Berkshire Hathaway. I plan to have James Hambrick, CEO of Lubrizol, oversee its strategic direction,” says Warren Buffett, CEO of Berkshire Hathaway. Lubrizol was acquired by Berkshire Hathaway in 2011.
The transaction is expected to close in the first half of 2014, following regulatory review.