MARKET INSIDER – Warren Buffett’s Berkshire Hathaway is reportedly poised to execute its largest acquisition in three years, closing in on a deal to purchase Occidental Petroleum’s petrochemical unit, OxyChem, for approximately $10 billion. The transaction, first reported Tuesday by the Wall Street Journal, could be finalized within days.
The potential $10 billion outlay would be Berkshire’s most substantial move since its $11.6 billion acquisition of insurer Alleghany, which was announced in March 2022 and completed that October. The Omaha-based conglomerate is in a prime position to execute such a deal, currently sitting on a record cash hoard of $344 billion.
The reported acquisition significantly deepens Berkshire’s commitment to the Houston-based energy giant. Berkshire already owns a considerable stake in Occidental common stock, holding a 28.2% stake valued at more than $11 billion. The 95-year-old Buffett first began building his common stock position in early 2022, after reading a transcript of the company’s earnings conference call, taking advantage of market volatility to acquire shares at a discount.
Berkshire’s relationship with Occidental dates back to 2019 when Buffett committed $10 billion to help bankroll Occidental’s purchase of Anadarko Petroleum, receiving preferred shares and warrants in return. Despite the news of the potential multi-billion dollar unit sale, shares of Occidental fell 1.8% on Tuesday. Occidental currently pays a 2% dividend yield and has been focused on investing in its carbon capture business.
The potential energy-sector deal also aligns strategically with the future leadership of Berkshire. While Buffett is stepping down as CEO at the end of 2025, remaining as chairman, his designated successor, Greg Abel, is noted for his strong expertise in the energy industry, having previously served as CEO of Berkshire Hathaway Energy.
