David Sokol's Role In Berkshire Hathaway's Lubrizol Deal
NEW YORK: Warren Buffett's leading heir apparent at Berkshire Hathaway, David Sokol, has resigned after buying shares in Lubrizol Corp, a chemical company he then pushed Buffett to acquire.
Below is a timeline of events running up to the $9 billion deal and Sokol's resignation, based on Buffett's statement on Wednesday and Lubrizol's regulatory filing on March 25.
Fall 2010: Sokol requests Citigroup investment bankers to come up with a list of possible targets for Berkshire Hathaway, including in the chemical industry. Citi gives him a list of 18 companies, including Lubrizol.
Dec 13, 2010: Sokol discusses the list with Citi and says Lubrizol was the only company he found interesting. He asks a Citi representative to tell Lubrizol Chief Executive James Hambrick that Sokol was interested in meeting to discuss a possible deal.
Dec 14: Sokol buys 2,300 Lubrizol shares.
Dec 17: Citi relayed Sokol's interest to Hambrick, who said he would inform the Lubrizol board of Berkshire's interest.
Dec 21: Sokol sells the Lubrizol shares.
Jan 5-7, 2011: Sokol buys 96,060 Lubrizol shares after placing a 100,000-share order with a $104 per share limit price.
Jan 6: Lubrizol's board discusses possible deal with Berkshire and engages Jones Day and Evercore for advice.
Jan 10: Lubrizol board convenes with Jones Day and Evercore to discuss a potential Berkshire deal. The board instructs CEO Hambrick to meet with Sokol.
Jan 14: Sokol and Hambrick have a general talk over the phone and set up a meeting for January 25
Jan 14 or 15: Sokol suggests buying Lubrizol to Buffett, with a "passing remark" that he owned some stock in the company. Buffett is not interested.
Jan 24: Buffett sends Sokol a short note expressing skepticism about making an offer for Lubrizol and preference to make another substantial acquisition.
Jan 25: Lubrizol CEO Hambrick meets with Sokol and gives him information about the chemical company, including internal forecasts for 2014 and 2015; Sokol reports the meeting to Buffett, who then warmed to the acquisition.
Jan 28: Evercore tell Lubrizol's board that Buffett called them the day before and expressed interest in the deal.
Feb 8: Hambrick meets with Buffett.
March 12: Lubrizol's board approves the sale to Berkshire.
March 13: Berkshire's board supports Buffett's decision to buy Lubrizol.
March 14: Berkshire announces plan to buy Lubrizol for $135 per share.
March 19: Shortly before leaving for a trip to Asia, Buffett learns the details of Sokol's purchase of Lubrizol shares.
March 28: Sokol's assistant delivers his letter of resignation to Buffett. Buffett says he had not asked for Sokol's resignation and that it came as a surprise. Sokol's letter says "it is my goal to utilize the time remaining in my career to invest my family`s resources in such a way as to create enduring equity value and hopefully an enterprise which will provide opportunity for my descendents and funding for my philanthropic interests."
March 30: Buffett announces Sokol's resignation request. He says, "Neither Dave nor I feel his Lubrizol purchases were in any way unlawful. He has told me that they were not a factor in his decision to resign."
Sources: Berkshire Hathaway statement, Lubrizol filing with U.S. Securities and Exchange Commission
(Compiled by Alina Selyukh)
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