Berkshire Hathaway buying OxyChem for $9.7B could be Warren Buffetts last big deal
Berkshire Hathaway is buying Occidental Petroleum’s chemical division for $9.7 billion in what may be the last big acquisition involving the consummate dealmaker, Warren Buffett.Buffett wasn’t mentioned anywhere in materials released by Berkshire Hathaway discussing the deal Thursday, potentially signaling a passing of the torch to Vice Chair Greg Abel, to whom Buffett will hand the CEO title in January.Buffett will remain chairman at Berkshire and will still be involved in deciding how to spend the conglomerate’s colossal pile of more than $344 billion cash.Berkshire’s cash reserves have been growing for years because Buffett has been unable to find any major acquisitions at attractive prices since completing the $11.6 billion acquisition of Alleghany Insurance in 2022.Prices for big acquisitions have been driven higher in recent years by the entry of more hedge funds in the market.OxyChem makes things like chlorine for water treatment, vinyl chloride for plastics and calcium chloride that’s used to treat icy roads along with an assortment of other chemicals.
It will fit nicely within Berkshire alongside Lubrizol, which Buffett bought in 2011 for $9 billion.“Berkshire is acquiring a robust portfolio of operating assets, supported by an accomplished team,” Abel said in a prepared statement.“We look forward to welcoming OxyChem as an operating subsidiary within Berkshire.”OxyChem generated $213 million in pretax earnings for Occidental in the second quarter, though that is down from last year when it generated nearly $300 million for the company.
This year, Occidental has been selling off some of its assets in the Permian Basin to generate $950 million to pay down debt.Since it completed the CrownRock acquisition in December 2023, Occidental has sold off roughly $4 billion worth of assets to help it pay down $7.5 billion in debt.
This OxyChem deal will accelerate that.Occidental expects to use $6.5 billion of proceeds from the Berkshi...