Berkshire's Lubrizol Deal: Key Events
Here is a timeline of events leading up to the $9 billion deal and Sokol's resignation.
Autumn 2010: Sokol requests Citigroup investment bankers 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: 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, receiving part of his 50,000-share limit order.
Dec. 17: Citi relayed Sokol's interest to Hambrick, who said he would inform the Lubrizol board of Berkshire's interest. Citi notified Sokol that Hambrick said he would take Berkshire's interest to the board.
Dec. 21: Sokol sells the 2,300 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 a 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 Jan. 25.
Jan. 14 or 15: Sokol suggests buying Lubrizol to Buffett, who asks how Sokol had become familiar with the company. In a "passing remark" Sokol says he owned some stock in the company, failing to disclose any of the details. Buffett says he is unfamiliar with Lubrizol's segment of the chemical industry and is generally not interested in the deal.
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 warms to the acquisition.
Jan. 28: Evercore tells 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 a plan to buy Lubrizol for $135 per share. A Citi representative tells Buffett that Citi's investment bankers brought Lubrizol to Sokol's attention.
March 15: Berkshire's CFO Marc Hamburg calls Sokol at Buffett's request to ask for the details of his Lubrizol stockholdings and of Citi's role. Sokol shares dates and amounts of stock purchases and says he thought he had called a Citi banker he knew to get the Lubrizol CEO's phone number. Sokol doesn't contradict Hamburg's suggestion that the banker may have exaggerated his role.
March 19: Shortly before leaving for a trip to Asia, Buffett learns the details of Sokol's Lubrizol stock holdings.
March 28: Sokol's assistant delivers his letter of resignation to Buffett. Buffett says he had not asked for the resignation and that it came as a surprise.
March 29: Buffett lets Sokol review a draft of the press release on his resignation, which includes disclosures of his stockholdings in Lubrizol. Sokol asks to remove a passage implying that he resigned because he must have known the trades would likely hurt his chances to become Buffett's successor. Sokol says he did not hope to be one and his resignation was unrelated to the trades.
March 30: Buffett announces Sokol's resignation request. He says: "Neither Dave nor I feel his Lubrizol purchases were in any way unlawful."
March 31: Sokol gives a half-hour interview on CNBC-TV in which he defends himself and says he has in the past invested in businesses that he then suggested that Buffett buy.
April 11: Lubrizol files a statement that for the first time discloses to Berkshire that Sokol knew as of Dec. 17 about Lubrizol CEO's plan to discuss a possible Berkshire deal with the company's board.
April 27: Berkshire announces that its audit committee is considering the possibility of legal action against Sokol and that it would cooperate with any government investigation. It says Sokol's "misleadingly incomplete" disclosures "violated the duty of candor" he owed to Berkshire.