Gabelli Comments On Lubrizol Monday Agreement

In a report published by Gabelli, Lubrizol LZ announced an agreement Monday to be acquired for $135 per share, or $9.7 bn (including $700 mm of net debt including a recent acquisition and Minority interests) in an all-cash transaction.

Gabelli said that the proposed transaction is valued at 7.1x its estimated EBITDA of $1.36 bn for 2011, and at 7.7x 2010 EBITDA of $1.26 bn. “In our opinion, the offer reflects a fair price based on the company's businesses and on other "reasonable" transactions in the specialty chemicals space. As filed yesterday, the break-up fee will be $200 mm. We do not believe that management will walk away from the transaction, or that another buyer will materialize. However, the final outcome depends also on shareholders' approval.”

Lubrizol closed yesterday at $133.77.