Warren Buffett’s Berkshire Hathaway on Thursday announced a $9.7 billion cash deal to buy Occidental Petroleum’s petrochemical subsidiary, OxyChem, marking its largest acquisition since 2022, when it paid $11.6 billion for insurer Alleghany.
The transaction comes as Berkshire sits on a near-record $344 billion in cash, underscoring Buffett’s strategy of deploying capital into large, established businesses with steady returns.
Occidental shares fell about 6 percent after the announcement, reflecting market unease over the sale of a profitable unit. But the deal gives Occidental the opportunity to strengthen its finances, with CEO Vicki Hollub confirming $6.5 billion of the proceeds will be directed toward debt repayment — a critical move following the heavy leverage the company took on during its $55 billion purchase of Anadarko Petroleum in 2019.
Register for Tekedia Mini-MBA edition 19 (Feb 9 – May 2, 2026): big discounts for early bird.
Tekedia AI in Business Masterclass opens registrations.
Join Tekedia Capital Syndicate and co-invest in great global startups.
Register for Tekedia AI Lab: From Technical Design to Deployment (next edition begins Jan 24 2026).
“The problem has been getting our debt down faster, 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,” Hollub told CNBC’s Squawk Box. “So now we’re going to be able to start our share repurchase program again. … This is the last step that we needed in our major transformation that we started 10 years ago.”
Buffett, now 95 and stepping down as CEO at the end of the year, has built Berkshire’s reputation on acquiring what he calls “forever assets.” In chemicals, this marks a return to familiar territory — the conglomerate paid around $10 billion in 2011 for Lubrizol, another specialty chemicals producer. Greg Abel, Berkshire’s vice chairman of non-insurance operations and Buffett’s successor from 2026, called OxyChem a natural fit.
“We look forward to welcoming OxyChem as an operating subsidiary within Berkshire,” Abel said, adding that Hollub’s decision to use proceeds to pay down debt demonstrates Occidental’s “commitment to long-term financial stability.”
The deal is expected to close in the fourth quarter. The Wall Street Journal first reported on the transaction earlier this week.
Berkshire’s relationship with Occidental dates back to 2019, when Buffett provided $10 billion in financing to help Occidental secure Anadarko. In exchange, Berkshire received preferred shares paying an 8 percent dividend, along with warrants to buy common stock. Hollub said Occidental intends to start redeeming Berkshire’s preferred shares in 2029 as it grows cash reserves, but until then, the dividend payments remain a reliable stream for Berkshire.
For Berkshire, the OxyChem deal highlights its evolving energy strategy compared with its other cornerstone holdings. While its utility arm, Berkshire Hathaway Energy, focuses on renewables and long-term infrastructure, and BNSF Railway provides steady transport returns, OxyChem fits into a different part of the industrial cycle — one tied to chemicals essential for water treatment, healthcare, and manufacturing. It also complements Berkshire’s 28.2 percent stake in Occidental, deepening exposure to the energy sector without taking direct control of the oil business, something Buffett has said he does not intend to do.
By contrast, Berkshire’s capital allocation in the past decade has also leaned heavily into insurance, railroads, and Apple — its single largest equity stake. The OxyChem acquisition reflects Buffett’s long-held preference for businesses that generate strong cash flows regardless of economic cycles, a pattern that investors expect Abel will continue after Buffett’s departure.
Occidental, meanwhile, views the divestiture as a long-awaited reset. The debt strain from Anadarko has loomed over the company for years, delaying buybacks and weighing on its stock. Hollub framed the OxyChem sale as the “last step” in a decade-long transformation, signaling to investors that the company is prepared to return cash to shareholders.
The deal, then, is as much about Berkshire’s future as Occidental’s. Buffett, who first stepped into Occidental during one of its most consequential deals in 2019, sees this as a parting move that underscores his belief in the durability of the U.S. energy and chemicals business. It offers a fresh chance for Occidental to regain footing with investors after years of balance-sheet pressure.