Key Points:
- Berkshire Hathaway nears $10B deal to acquire OxyChem from Occidental Petroleum.
- Strategic move marks Buffett’s second major chemical sector investment after Lubrizol.
- OxyChem’s $5B revenue and role in key industries support Occidental’s debt reduction goals.
Warren Buffett’s Berkshire Hathaway Inc. is reportedly in the final stages of negotiations to acquire Occidental Petroleum’s chemical division, OxyChem, in a transaction valued at around $10 billion. If completed, the deal would mark Berkshire’s most significant acquisition since its $13.7 billion purchase of Alleghany Corp. in 2022.
According to individuals familiar with the matter, the announcement could come within days, although no official confirmation has been provided by either Occidental or Berkshire. The Wall Street Journal first reported on the potential acquisition earlier this week.
A Return to Major Deals
For much of the last decade, Berkshire Hathaway has taken a conservative stance on large acquisitions, preferring incremental investments and divestments in publicly traded companies. Buffett’s firm notably pared down its substantial holdings in Apple, while also holding back from blockbuster deals in a competitive mergers-and-acquisitions market.
However, recent moves suggest a shift in strategy. Earlier this year, Berkshire made a $1.6 billion investment in UnitedHealth Group, signaling renewed appetite for major transactions. With this latest development, Berkshire could be making its largest push yet into the chemicals sector, leveraging its extensive cash reserves of $344 billion, a near-record figure as of June.
The proposed OxyChem acquisition would provide Berkshire access to a steady revenue stream from a business deeply integrated into industrial supply chains. Analysts say this reflects Buffett’s traditional focus on acquiring companies with consistent cash flows and strategic positioning in essential industries.
OxyChem’s Market Role
Occidental’s OxyChem division is a leading producer of basic chemicals such as chlorine, sodium hydroxide, and vinyl products. These chemicals are vital components in a wide range of industries, from construction and manufacturing to pharmaceuticals and consumer goods.
According to company filings, OxyChem is projected to generate pretax income of $800 million to $900 million this year. Despite ongoing volatility in the global energy and chemicals markets, the business has shown resilience and remains an important contributor to Occidental’s overall financial performance.
For Occidental, the sale represents part of a broader strategy to strengthen its balance sheet. The company has announced nearly $4 billion in asset sales since early 2024, working to reduce debt while continuing to invest in its core oil and gas operations. Last year, Occidental completed its $10.8 billion purchase of CrownRock LP, a deal that expanded its footprint in the Permian Basin, one of the most productive oil fields in the United States.
Strategic Value for Berkshire
If finalized, the OxyChem acquisition would provide Berkshire with exposure to an industry that produces critical inputs for global manufacturing and infrastructure development. Unlike some cyclical businesses, basic chemicals enjoy stable demand tied to long-term industrial growth.
For Berkshire’s portfolio, OxyChem could deliver both diversification and reliable cash generation. The business aligns with Buffett’s investment philosophy of acquiring assets with strong competitive positions and predictable earnings, rather than relying heavily on market speculation or high-risk ventures.
Market analysts also note that the transaction reflects Berkshire Hathaway ability to capitalize on opportunities where traditional competitors may be constrained by financing costs. With its massive cash reserves, Berkshire is well-positioned to strike sizeable deals without requiring heavy debt financing.
Outlook
While the transaction has not yet been finalized, the reported $10 billion deal would reaffirm Berkshire Hathaway’s role as one of the most influential players in global business. With Buffett set to step down as CEO later this year, the acquisition may also represent one of his last major moves in shaping the future direction of the company.
For Occidental, the sale would provide fresh liquidity to support its debt-reduction strategy and enable greater focus on energy production. For Berkshire Hathaway, the acquisition would add a strategically important asset with strong earnings potential and enduring relevance to the global economy.
If confirmed in the coming days, the OxyChem purchase would not only mark a return to large-scale acquisitions for Berkshire Hathaway but also reinforce the company’s long-standing strategy of investing in businesses that form the backbone of everyday economic activity.
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