Warren Buffett’s Berkshire Hathaway to Acquire OxyChem for $9.7 Billion

Occidental Petroleum plans to use some of the cash to pay down its debt.

Published: 10/2/2025, 1:31:16 PM EDT

Warren Buffett’s Berkshire Hathaway to Acquire OxyChem for $9.7 Billion — Berkshire Hathaway CEO and Chairman Warren Buffett smiles during an interview in Omaha, Neb., on May 7, 2018. (Nati Harnik/AP Photo)

Warren Buffett’s Berkshire Hathaway will acquire OxyChem, Occidental Petroleum’s petrochemical unit, for $9.7 billion in cash, the companies announced on Oct. 2.

Occidental shares rose more than 1 percent in premarket trading following the announcement, but reversed course shortly after the opening bell, falling by about 4 percent. This year, Occidental shares are down about 10 percent amid high debt levels and falling crude oil prices.

The acquisition of the chemical producer remains subject to approval, with both companies expecting to close the deal in the fourth quarter.

If completed, it would mark Berkshire Hathaway’s most significant transaction since its $11.6 billion purchase of insurer Alleghany Corporation in 2022. Berkshire’s purchase will also expand its chemical exposure beyond Lubrizol, which was bought for $10 billion in 2011.

Berkshire is already a major investor in Occidental, holding a 28 percent stake. Its involvement dates back to 2019, when it committed $10 billion to help finance Occidental’s takeover of oil producer Anadarko Petroleum, outbidding rival Chevron.

Vicki Hollub, president and CEO of Occidental, said the deal will bolster the company’s financial position.

She told CNBC’s “Squawk Box” that it will aid in its debt reduction strategies.

“The problem has been getting our debt down faster,” Hollub said on Oct. 2. “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.”

Occidental’s total debt, as of June 2025, stood at about $23 billion. After the deal with Berkshire is finalized, it plans to use $6.5 billion of the proceeds to reduce its debt.

The move would help Occidental reach its goal of reducing principal debt below $15 billion, a target set after announcing the CrownRock acquisition in December 2023.

Greg Abel, vice chairman of non-insurance operations at Berkshire, lauded Hollub’s dedication to strengthening the firm’s financial position and reinforcing the company’s balance sheet.

“Berkshire is acquiring a robust portfolio of operating assets, supported by an accomplished team,” Abel said in a statement. “We look forward to welcoming OxyChem as an operating subsidiary within Berkshire.”

Before the announcement, analysts’ consensus rating was “Hold,” with a 12-month consensus upside price target of almost 20 percent, according to MarketBeat.

Global energy prices have slumped this year as growing production and supplies, along with a lack of change in demand, have sent crude oil prices sliding by more than 14 percent.

While the transaction is unlikely to bolster Occidental’s outlook, it will accelerate its financial situation, Fitch Ratings Senior Director Mark Sadeghian said.

“It is likely to significantly accelerate the company’s progress toward its debt targets, as well as improve key credit metrics, including midcycle EBITDA/leverage and midcycle FFO/interest coverage,” Sadeghian said in an Oct. 2 note.

Sitting on a Pile of Money

Berkshire Hathaway is currently sitting on a record cash pile of approximately $344 billion, even as it added to existing stock positions and bought some new stocks in the second quarter of 2025, according to 13F filings.

Its top five holdings in the second quarter included Apple (22.31 percent), American Express (18.78 percent), Bank of America (11.12 percent), Coca-Cola (10.99 percent), and Chevron (6.79 percent).

The investment fund built new positions in several companies in different sectors, including homebuilders D.R. Horton and Lennar, steel producer Nucor, health care giant UnitedHealth Group, and Domino’s Pizza.

While Berkshire’s investment portfolio predominantly comprises stocks, the company has also invested heavily in short-term Treasury securities. The company holds more than $300 billion in T-Bills, surpassing the Federal Reserve’s stake of nearly $200 billion.

Berkshire controls about 5 percent of the entire $6.2 trillion T-Bill market.

Yields on T-Bills—maturities of one year or less—remain elevated. The one-month bill offers a yield of about 4.1 percent, while the one-year yield is about 3.64 percent.

From The Epoch Times