Buffett strikes deal to buy $1.4B Phillips 66 unit

HOUSTON – Warren Buffett is betting on energy transportation technology.

The billionaire investor’s Berkshire Hathaway made a deal on Monday for Phillips 66’s pipeline flow improver business, which manufactures a chemical agent that breaks up debris and moves oil and gas through pipelines.

Buffett agreed to exchange 19 million shares his company owns in Phillips 66 — worth $1.4 billion at the close of trading Monday — for all of the Houston refiner’s stock in its specialty products unit, according to regulatory filings.

Buffett said in a statement the business “fit well within Berkshire Hathaway,” and that it would be folded into his Ohio chemicals maker Lubrizol Corp.

Berkshire Hathaway approached the Houston refiner and “made a great offer” for a non-core business the company had not put on the sales block, said Phillips 66 spokesman Dean Acosta.

The billionaire’s purchase could help the Phillips 66 focus on growing its midstream and chemicals businesses, Acosta said. The company has plans to shift its focus away from refining and spend $2.7 billion  next year to expand those businesses, up 40 percent from its 2013 budget.

The flow improver business could have $450 million in cash and other assets on its books by the time the deal closes, the company said.

Phillips Specialty Products Inc.  has a manufacturing plant and 58 employees in Bryan, Texas, as well as 50 sales and marketing employees in Houston, Acosta said.

Regulatory filings show that Buffett’s company owns 27 million shares in Phillips 66.

The deal is expected to close in the first half of next year. Phillips 66 shares edged up 9 cents to $74.72 in after-hours trading Monday.