Berkshire Hathaway buying OxyChem for $9.7B — could be Warren Buffett’s last big deal
News Summary
Berkshire Hathaway is acquiring Occidental Petroleum's chemical division, OxyChem, for $9.7 billion. This deal may represent Warren Buffett's last major acquisition as a dealmaker, though he will remain chairman and involved in decisions regarding Berkshire's substantial cash reserves. The article suggests a potential transition of leadership to Vice Chair Greg Abel, who is slated to take over as CEO in January. OxyChem, which produces chemicals like chlorine for water treatment and vinyl chloride for plastics, will complement Berkshire's existing holding, Lubrizol. Occidental Petroleum intends to use $6.5 billion of the proceeds from this deal to reduce its debt, aiming to bring its principal debt below $15 billion, a target set after its CrownRock acquisition in December 2023. Prior to this transaction, Berkshire already held over 28% of Occidental's stock.
Background
Berkshire Hathaway is a diversified conglomerate built by Warren Buffett over the past 60 years, owning dozens of companies across insurance, railroad, utilities, and consumer brands. It also holds a stock portfolio valued over $250 billion, including significant stakes in Apple, Coca-Cola, Bank of America, and American Express. Berkshire's cash reserves have grown for years, exceeding $344 billion, partly because Buffett has struggled to find major acquisitions at attractive prices since the $11.6 billion acquisition of Alleghany Insurance in 2022. Occidental Petroleum, following its CrownRock acquisition in December 2023, has been selling assets to reduce its debt, targeting principal debt below $15 billion. Berkshire previously helped finance Occidental's 2019 purchase of Anadarko by acquiring preferred shares and warrants.
In-Depth AI Insights
What are the deeper implications of this acquisition for Berkshire Hathaway's capital allocation and management succession strategy? - This deal suggests that even before Greg Abel officially assumes the CEO role, Berkshire's investment strategy is visibly shifting towards Abel-led, industrially focused asset integration rather than purely financial investments. Buffett's absence from the deal's press materials further solidifies this narrative. - Acquiring OxyChem for $9.7 billion, while significant, is not a truly