Warren Buffett’s conglomerate Berkshire Hathaway has announced the acquisition of Occidental Petroleum’s (Oxy) chemical unit, OxyChem, in a deal valued at $9.7 billion. The all-cash transaction is expected to close by the fourth quarter of 2025, subject to regulatory approvals and customary closing conditions.
Occidental confirmed that proceeds from the sale will primarily be used to repay about $6.5 billion in debt, significantly reducing its liabilities and strengthening its balance sheet.
About Occidental and OxyChem
Occidental Petroleum (Oxy) is one of the leading oil and gas producers in the United States. Following its 2019 acquisition of Anadarko, the company has been carrying a heavy debt burden, prompting asset sales to improve financial health.
OxyChem, the chemical arm of Occidental, manufactures essential products such as water-treatment chemicals, vinyls, and battery-recycling inputs. With large facilities in the U.S., Canada, and Latin America, OxyChem is considered one of the steady cash-generating businesses within Occidental’s portfolio.
Key Details of the Deal
- Buyer: Berkshire Hathaway
- Seller: Occidental Petroleum
- Deal Value: $9.7 billion (all cash)
- Closing Timeline: Expected in Q4 2025 (pending regulatory approvals)
- Special Condition: Occidental will retain responsibility for certain legacy environmental liabilities, including site clean-ups and remediation.
Why is Occidental Selling?
Occidental’s CEO Vicki Hollub explained that the company aims to significantly reduce debt and sharpen its focus on core oil and gas operations.
- Proceeds of about $6.5 billion will directly go towards debt repayment.
- Oxy plans to bring its overall debt down to below $15 billion.
This move aligns with Occidental’s broader strategy to strengthen its financial flexibility after years of high leverage.
Why Does Berkshire Want OxyChem?
For Berkshire Hathaway, the acquisition fits into its long-term strategy of investing in industrial and cash-generating businesses.
- OxyChem operates in markets like water purification, vinyl products, and battery recycling — sectors with steady demand.
- The acquisition strengthens Berkshire’s industrial portfolio and diversifies its revenue streams.
- Analysts suggest the $9.7 billion valuation may be attractive, making it a “smart buy” for Berkshire.
Market and Investor Reaction
Following the announcement, Occidental’s stock showed mixed movements:
- Some investors welcomed the debt reduction as a positive sign.
- Others expressed concern that Occidental is losing a steady source of cash flow.
- Analysts remain divided — while some call it a strategic win for both companies, others caution that Oxy’s long-term growth prospects may slow without OxyChem.
What Lies Ahead
The deal is still subject to regulatory scrutiny, including possible antitrust reviews. Occidental will continue to handle certain environmental obligations, which could remain a financial burden. If completed on schedule, the acquisition will be counted among the major late-career deals of Warren Buffett.
Outcome
This deal appears to be a practical move for both sides. Occidental reduces its debt and gains financial stability, while Berkshire Hathaway secures a stable, cash-generating business to strengthen its industrial portfolio. Though market reactions are mixed, experts believe the acquisition could prove strategically beneficial for both companies in the long run.
Source: Oxy news
