Lubrizol Corp. (LZ), a specialty chemical manufacturer, announced the authorization of share repurchases of up to 7.2 million, which forms about 10% of the total share capital. Year-to-date 2010, Lubrizol has repurchased 1.575 million shares for $125.5 million for an average price of about $80 per share.
The company intends to complete the buyback within 1.5 years to 2 years from now. Lubrizol plans to make the purchases either in the open market or through private transactions.
Lubrizol is cash rich. As of Mar 31, 2010, the company had cash and cash equivalents of $942 million. We expect such high cash balance to should help it finance the repurchase.
Ohio-based Lubrizol is a specialty chemical company and serves the transportation, industrial and consumer markets. The company supplies lubricant additives for engine oils, other transportation-related fluids and industrial lubricants, as well as fuel additives for gasoline and diesel fuel. In addition, it makes ingredients and additives for personal care products and pharmaceuticals; specialty materials, including plastics technology and performance coatings in the form of specialty resins and additives.
Lubrizol reported strong results in the last two quarters. The company has projected steady earnings growth during the next several years and has established a 2012 goal for earnings of $10 per share, an increase of 32% compared with 2009 results. This reflects an improved contribution from the company’s base business, a more favorable product mix, as well as potential returns from value-adding acquisitions. Lubrizol plans to sustain its operating margins in the Additives business. The company is also targeting continued improvement in Advanced Materials margins.
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