Berkshire Hathaway to Acquire Occidental’s OxyChem for $9.7 Billion
Berkshire Hathaway announced on Thursday its agreement to purchase the petrochemical division of Occidental Petroleum, OxyChem, for $9.7 billion in cash. This transaction represents Berkshire’s largest acquisition since its $11.6 billion purchase of insurer Alleghany in 2022. The deal comes as Berkshire sits on a substantial cash reserve nearing $344 billion, underscoring the conglomerate’s strong liquidity position amid strategic expansion.Market Reaction and Occidental’s Strategic Moves
Following the announcement, Occidental’s shares declined by more than 7%. Berkshire Hathaway already holds a significant 28.2% stake in Occidental as of June, with Warren Buffett indicating no intention to assume full control of the Houston-based oil company. OxyChem specializes in manufacturing chemicals for water treatment, healthcare, and other commercial applications. Occidental intends to allocate $6.5 billion of the sale proceeds to reduce its debt burden.“The problem has been getting our debt down faster, so this resolves the one outstanding issue that I think will now unlock our stock and allow shareholders to feel more comfortable, hopefully, to add to their positions and others to come in,” said Occidental CEO Vicki Hollub during an interview on CNBC’s “Squawk Box.”
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“So now we’re going to be able to start our share purchase program again. This is the last step that we needed in our major transformation that we started 10 years ago.”
Strategic Significance and Leadership Perspectives
This acquisition marks Berkshire Hathaway’s first foray into the chemical sector since 2011, when it acquired Lubrizol for approximately $10 billion. Greg Abel, Berkshire’s vice chairman of non-insurance operations and Buffett’s designated successor as CEO in 2026, welcomed OxyChem as a new operating subsidiary. Abel emphasized Occidental CEO Vicki Hollub’s commitment to the company’s long-term financial stability, noting the strategic use of sale proceeds to strengthen Occidental’s balance sheet. Both parties anticipate closing the transaction in the fourth quarter of 2025. The Wall Street Journal had initially reported details of the deal earlier in the week. Buffett’s involvement with Occidental began in 2019, when he supported Occidental’s acquisition of Anadarko Petroleum with a $10 billion investment, receiving preferred shares and warrants in exchange. Occidental plans to begin redeeming Berkshire’s preferred stock starting in 2029 as its cash reserves grow. Currently, Occidental pays an 8% dividend on these preferred shares.FinOracleAI — Market View
Berkshire Hathaway’s acquisition of OxyChem is a strategic move that consolidates its presence in the chemical industry while supporting Occidental’s balance sheet improvement and shareholder return strategy. The deal highlights Buffett’s continued confidence in Occidental’s management and long-term prospects despite stepping down as CEO.- Opportunities: Integration of OxyChem can generate operational synergies and diversify Berkshire’s industrial portfolio.
- Debt Reduction: Occidental’s $6.5 billion debt repayment strengthens its financial flexibility, enabling renewed stock buybacks.
- Leadership Transition: Greg Abel’s upcoming CEO role signals continuity in Berkshire’s strategic direction.
- Market Confidence: The deal may boost investor sentiment toward Occidental as it enhances capital allocation efficiency.
- Dividend Yield: Berkshire benefits from an 8% dividend on preferred stock until redemption begins in 2029.
