OMAHA, Neb. — Warren Buffett’s Berkshire Hathaway announced Thursday it reached an agreement to purchase Occidental Petroleum’s petrochemical division, OxyChem, for $9.7 billion in cash marking the conglomerate’s largest acquisition since 2022 and one of Buffett’s final major deals before stepping down as CEO.
The transaction reflects Berkshire’s confidence in the industrial and chemical sectors as the company sits on a near record $344 billion cash pile. Shares of Occidental Petroleum rose 1.4% in premarket trading Thursday after the announcement.
This acquisition strengthens Berkshire’s portfolio of industrial businesses and reflects our long term approach to value creation, Greg Abel, Berkshire’s vice chairman of non insurance operations, said in a press release. Abel will succeed Buffett as chief executive in 2026.
Berkshire Hathaway, headquartered in Omaha, is already one of Occidental’s largest shareholders, holding a 28.2% stake as of June. Buffett, 95, has repeatedly signaled that while he views Occidental as a strong investment, he does not intend to assume full control of the Houston based oil producer.
OxyChem, the division being acquired, manufactures chemicals used in water treatment, healthcare, and other commercial applications. Occidental said it will use $6.5 billion of the proceeds from the sale to pay down debt, with the remaining funds directed toward operational flexibility.
The problem has been getting our debt down faster, Occidental CEO Vicki Hollub said on CNBC’s Squawk Box Thursday. “This resolves the one outstanding issue that I think will now unlock our stock and allow shareholders to feel more comfortable… So now we’re going to be able to start our share repurchase program again.”
The last time Berkshire invested in the chemical sector was in 2011, when it acquired Lubrizol for roughly $10 billion.
Industry analysts view the OxyChem purchase as a strategic diversification move for Berkshire, positioning it for stability amid volatile energy markets.
Chemicals are a steady cash generating business, less exposed to commodity price swings, said Michael Trent, senior analyst at Morningstar. “Buffett’s strategy has always favored predictable earnings, and OxyChem fits neatly into that model.”
The deal also signals Berkshire’s continued appetite for large scale acquisitions despite Buffett’s impending retirement. “This transaction shows Buffett’s faith in the next generation of Berkshire leadership, particularly Greg Abel, who has long experience in industrial operations,” Trent added.
Financial experts note that the $9.7 billion purchase, funded entirely in cash, leverages Berkshire’s record liquidity while avoiding new debt. With $344 billion in cash, Berkshire is under pressure to deploy capital, said Lisa Nguyen, portfolio manager at Wellington Capital. “This deal allows them to do so in a measured, low risk way.”
Berkshire’s last major acquisition came in 2022, when it paid $11.6 billion for insurance company Alleghany. Before that, the conglomerate’s deal activity had slowed as valuations across industries surged.
The OxyChem deal ranks among the top chemical industry transactions in recent years, comparable to ExxonMobil’s $4.9 billion purchase of Denbury in 2023 and DowDuPont’s merger in 2017.
Occidental, meanwhile, has spent much of the past decade reshaping its balance sheet following its 2019 purchase of Anadarko Petroleum, a $55 billion deal partly financed by Buffett. As part of that transaction, Berkshire received preferred shares paying an 8% annual dividend and warrants to purchase additional common stock.
Occidental has pledged to begin redeeming those preferred shares starting in 2029. According to data from S&P Global, Occidental’s long term debt stood at approximately $18 billion as of June 30, 2025. The $6.5 billion debt reduction from the OxyChem sale is expected to significantly lower leverage ratios and free cash flow commitments.
Reaction from investors and local stakeholders has been largely positive. It’s a win-win, said Jennifer Collins, a Houston based energy consultant. “Occidental trims its debt and gets breathing room, while Berkshire gains a stable business with consistent margins.”
Employees at OxyChem’s Baton Rouge facility expressed cautious optimism. There’s some uncertainty whenever ownership changes, but Berkshire has a reputation for letting subsidiaries run independently, said Carlos Ramirez, a plant supervisor with 15 years at the company. That gives us some comfort.
Local business groups also welcomed the transaction. Berkshire’s involvement brings credibility and long term stability to the Gulf Coast chemical sector, said Laura Greene, president of the Texas Chemical Council.
Both companies expect the deal to close in the fourth quarter of 2025, subject to regulatory approval. Berkshire indicated OxyChem will operate as an independent subsidiary, consistent with its hands off approach to management.
For Occidental, the sale marks a final step in a decade long transformation. “With this transaction, Occidental can focus more sharply on core energy operations and shareholder returns,” said Hollub. “Our balance sheet is now where it needs to be.”
Experts believe the move may signal further M&A activity by Berkshire as it seeks to deploy its massive cash reserves. Buffett’s team has been waiting for the right deals, said Trent. “This could be the first of several transactions before the leadership transition.”
The acquisition also positions Berkshire to benefit from long term demand for industrial and water treatment chemicals, especially as infrastructure spending rises globally.
Berkshire Hathaway’s $9.7 billion acquisition of Occidental’s OxyChem division underscores Warren Buffett’s enduring focus on stable, cash generating assets and signals confidence in the chemical sector’s long term prospects.
As Buffett prepares to step back from day to day management, the deal highlights both continuity in Berkshire’s investment philosophy and the growing leadership role of Greg Abel. For Occidental, the transaction provides critical debt relief and renewed flexibility to reward shareholders.
If completed as expected later this year, the deal will mark a defining transaction in Buffett’s late career one that balances Berkshire’s vast cash reserves with disciplined capital allocation in a changing industrial landscape.