Berkshire's $9.7 Billion Acquisition of Occidental Petroleum's Chemical Business OxyChem
Taylor Wilson
Berkshire Hathaway is acquiring OxyChem, Occidental Petroleum's chemicals business, for $9.7 billion in cash — its largest deal since 2022. Occidental shares fell more than 7% on the announcement, as analysts flagged a below-mid-cycle sale price and lingering environmental liabilities.
What exactly is Berkshire buying, and at what price?
Berkshire is paying $9.7 billion in cash for OxyChem, Occidental Petroleum's chemicals arm — the largest single acquisition by Berkshire since 2022.
After roughly $1.7 billion in tax leakage, Occidental's after-tax proceeds come to about $8 billion.
This means → the headline price is $9.7 billion, but Occidental actually pockets only about 80 cents on the dollar.
Why did the market react so badly?
Occidental's stock dropped more than 7% the day the deal was announced.
JPMorgan analysts pointed to the core issue: Occidental is selling OxyChem near the bottom of the chemicals cycle, at a price below mid-cycle normalized valuation.
In plain terms = the chemicals industry runs in boom-and-bust cycles, and Occidental is selling at what may be the worst possible moment in that cycle.
What risks stay with Occidental after the sale?
Occidental retains roughly $1.9 billion in environmental-remediation liabilities tied to OxyChem (as of year-end 2024).
Mizuho Securities warned that if actual cleanup costs exceed current estimates, Occidental's future cash flow could take a hit.
JPMorgan also calculated that Occidental will miss OxyChem's Battleground plant expansion — set to come online in 2026 and generate about $460 million in annual cash flow.
This means → Occidental not only sold at a low price but also kept the liabilities and gave up near-term growth.
What is Buffett's history with Occidental?
The relationship dates to 2019, when Buffett invested $10 billion to help Occidental acquire Anadarko Petroleum, receiving preferred shares and warrants.
Starting in early 2022, Buffett began buying Occidental common stock on the open market; by the end of June this year he held 28.2%, making Berkshire the largest shareholder.
Berkshire's preferred shares carry an 8% dividend; the common stock yields roughly 2.1%. Occidental's CEO said the company plans to begin redeeming Berkshire's preferred shares in 2029.
What is the central question this deal raises?
Buffett is set to retire by year-end, placing this deal on the eve of a leadership transition.
Berkshire held a record $382 billion in cash and equivalents at the end of Q3 — ample firepower.
This reflects Buffett's long-standing playbook — buy when others are fearful, acquire assets at the bottom of the cycle. Whether OxyChem delivers long-term returns as the chemicals cycle recovers is the core test of this transaction.
Content is for reference only, not financial advice.