Berkshire Hathaway will pay $9.7 billion in cash to acquire OxyChem, Occidental Petroleum’s chemical business. This Buffett deal could be Warren Buffett’s last major purchase before he steps down as CEO. Additionally, the acquisition strengthens the company’s ties with Occidental, where Berkshire already owns nearly 27% of shares. By making this strategic move, Berkshire continues to expand its presence in the chemicals sector while maintaining significant influence over Occidental.
Occidental will use $6.5 billion of the purchase proceeds to reduce debt, bringing its total below the $15 billion target. Consequently, the company can resume share repurchases and focus on value creation. Moreover, Occidental will still pay Berkshire more than $600 million in dividends each year until preferred shares are redeemed. Analysts note that the Buffett deal helps both companies balance risk, stabilize operations, and maintain long-term financial health.
Berkshire’s relationship with Occidental began with an investment that included preferred shares earning an 8% dividend. The Buffett deal does not involve acquiring the entire company, confirming Berkshire’s strategy to strengthen partnerships rather than full ownership. Furthermore, Berkshire holds warrants to buy nearly 84 million additional OXY shares at a price above current market value, enhancing long-term options. This structure ensures Berkshire benefits from the chemical business without assuming excessive risk.
Wall Street reacted cautiously to the announcement. Occidental shares initially fell more than 8% before slightly recovering, reflecting market concerns. However, analysts say the Buffett deal could prove favorable since earnings in the sector are depressed but expected to improve. Additionally, reducing Occidental’s debt load enhances operational flexibility and strengthens financial stability. These factors highlight why Berkshire acted strategically rather than aggressively.
Berkshire also prepared for a leadership transition by separating the chairman and CEO roles. Greg Abel will take over as CEO while Buffett remains chairman. The Buffett deal demonstrates how the company maintains decisive investments during leadership change. Moreover, the move reassures investors that Berkshire will continue disciplined acquisitions under Abel’s future leadership.
Overall, the Buffett deal represents a calculated acquisition that reinforces Berkshire’s position in the chemicals market. The company balances risk and growth while supporting Occidental’s long-term stability. Through this move, Berkshire Hathaway illustrates how strategic investments continue to drive shareholder value under an upcoming CEO transition.
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