Billionaire Warren Buffett's Berkshire Hathaway Inc agreed to buy lubricants maker Lubrizol Corp for $9 billion to tap rising demand for chemicals used to operate engines and machinery.

Just two weeks ago, Buffett wrote to Berkshire shareholders vowing to use its huge cash pile on acquisitions. Our elephant gun has been reloaded, and my trigger finger is itchy, the 80-year-old investor wrote in his annual letter.

Lubrizol is exactly the sort of company with which we love to partner, Buffett said in a statement on Monday.

In February, Lubrizol posted strong quarterly profit and issued a bullish forecast for 2011, signaling demand for lubricants continues to recover with the economy.

Berkshire, which has a cash pile of about $38 billion, will acquire Lubrizol for $135 per share, about a 28 percent premium to Lubrizol's closing price on Friday.

The deal, Berkshire's biggest since it bought Burlington Northern Santa Fe for more than $26 billion in late-2009, includes the assumption of about $700 million of debt.

Lubrizol, whose flagship segments are additives and advanced materials, will continue to be led by its current management team under James Hambrick, the companies said.

Wickliffe, Ohio-headquartered Lubrizol, founded in 1928 but which traces its roots back as far as the 1870s when it began as BFGoodrich Performance Materials, employs 6,900 staff worldwide, producing specialty polymers and additives used in everything from engine oil and personal care products to pharmaceuticals and coatings.

Earlier this year, Lubrizol said it will buy rival Nalco's personal care business, which makes ingredients for hair, skin and home care products, for $166 million.

Citi and Evercore Partners are acting as financial advisers to Lubrizol, which owns and operates plants in 17 countries.

Shares of Lubrizol rose 27 percent before the bell on Monday. They closed at $105.44 on Friday on the New York Stock Exchange.

(Reporting by Thyagaraju Adinarayan; Editing by Gopakumar Warrier)