As Warren Buffett nears retirement, he's making his biggest purchase in years

By James Rogers

Buffett's Berkshire Hathaway says it is acquiring a 'robust portfolio of operating assets' from Occidental, a company in which it is the largest shareholder

Warren Buffett's Berkshire Hathaway is purchasing Occidental's OxyChem chemicals business in a $9.7 billion cash transaction.

Warren Buffett's Berkshire Hathaway Inc. said Thursday that it is buying Occidental Petroleum Corp.'s OxyChem chemicals unit, marking the conglomerate's latest foray into the petrochemical business.

The $9.7 billion deal comes less than three months before Buffett plans to retire, and as Berkshire Hathaway has been stockpiling cash. It marks Berkshire Hathaway's (BRK.A) (BRK.B) largest acquisition in three years, and its second petrochemicals acquisition following its 2011 purchase of specialty-chemicals maker Lubrizol Corp. That acquisition was valued at almost $10 billion at the time.

Occidental (OXY) said it plans to use the bulk of the proceeds from the sale to reduce its debt burden. That also benefits Buffett, because Berkshire Hathaway is Occidental's largest shareholder, with about a 28% stake, according to FactSet data.

Occidental shares ended Thursday's session down 7.3%, while Berkshire's Class B shares declined 0.4%. Since May 3 - the day Buffett said he would retire at the end of the year - Berkshire's shares have lost more than 3%.

Berkshire's current share price represents an attractive entry point for long-term investors, Edward Jones analyst James Shanahan said in a note Thursday, with its revenue and earnings benefitting from a diverse group of holding companies. Berkshire's nearly $350 billion in cash holdings is also "a strong earnings catalyst" should it invest heavily in operating companies, individual stocks or its own shares, he added.

Shanahan, who recently upgraded the conglomerate to buy from hold, notes that the second quarter of 2025 marked the 11th consecutive quarter in which Buffett and his team sold more stocks than they purchased.

In OxyChem, Berkshire is acquiring a "robust portfolio of operating assets," Greg Abel, Berkshire's vice chair of noninsurance operations, said in a statement. In 2024, OxyChem contributed about $4.92 billion to Occidental's total sales of $26.73 billion.

TD Cowen analyst David Deckelbaum described OxyChem in a recent note as a "market-leading" caustic-soda and PVC producer with 23 facilities globally. The unit, he noted, is embarking on a set of multiyear growth initiatives, such as the expansion of its Battleground plant in Harris County, Texas. The sale would help reduce Occidental's debt burden, he added.

The all-cash transaction is expected to close in the fourth quarter, the companies said in the statement.

The announced purchase of OxyChem, which confirms a Wall Street Journal report from earlier this week, also represents Berkshire's largest acquisition since it bought reinsurance company Alleghany Corp. for almost $12 billion in 2022.

An Occidental subsidiary will retain OxyChem's legacy environmental liabilities, and Glenn Springs Holdings Inc. will continue to manage existing remedial projects for that subsidiary, the companies said.

Occidental plans to use $6.5 billion in proceeds from the deal to reduce debt and achieve a target, set following its December 2023 acquisition of CrownRock L.P., of bringing principal debt below $15 billion.

Occidental bond prices rise as investor confidence increases

The bond market was reacting warmly to Occidental's debt-reduction effort. Prices for Occidental's most active bonds continued their recent upward trajectory following the announcement of the OxyChem deal, as the following chart from data-solutions provider BondCliQ Inc. shows.

Select Occidental Petroleum bonds: One-week price performance.

As a bond's price rises, the yield decreases. So rising bond prices reflect increased investor confidence in a company, as it shows they are willing to accept lower interest payments to compensate for any risk.

Occidental shares are down 10.5% in 2025, while Berkshire's stock is up 9.5%.

Claudia Assis contributed.

-James Rogers

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10-02-25 1938ET