Warren Buffett’s Berkshire Hathaway Inc. has struck a significant deal, agreeing to acquire Occidental Petroleum Corp.’s petrochemical unit, OxyChem, for $9.7 billion in cash. Announced on Thursday, this transaction marks Berkshire’s largest acquisition since its 2022 purchase of insurer Alleghany Corp. for $11.6 billion, according to details reported by CNBC. The move comes as Berkshire sits on a record cash pile of $344 billion, providing ample firepower for such investments amid a cautious market environment.

The deal allows Occidental to accelerate its debt reduction strategy, with plans to use $6.5 billion of the proceeds to bring net debt below $15 billion. This shift enables the Houston-based energy giant to refocus on its core oil and gas operations, particularly in the Permian Basin, as stated by Occidental CEO Vicki Hollub in the announcement.

Strategic Implications for Berkshire’s Portfolio Expansion

Berkshire’s interest in OxyChem aligns with Buffett’s long-standing affinity for energy-related assets. Already holding a 28.2% stake in Occidental, valued at over $11 billion, Berkshire views this acquisition as a bolt-on to its existing investments. OxyChem, which produces chemicals for applications like water treatment and plastics, generated about $850 million in pretax profits this year, though that’s down from prior peaks due to margin pressures in the sector, per analysis from TipRanks.

Industry observers note that this petrochemical business has faced headwinds from competitors like Dow Inc. and LyondellBasell Industries NV, making it a potentially undervalued asset for a buyer like Berkshire, which can integrate it into its diverse holdings including chemicals through other subsidiaries.

Buffett’s Succession and the Role of Greg Abel

Notably absent from the deal’s public materials was any direct mention of Buffett himself, fueling speculation about the transition to his successor, Greg Abel. Abel, formerly CEO of Berkshire Hathaway Energy, brings deep expertise in the sector, which could explain the timing of this energy-focused acquisition. As Buffett, now 95, prepares to step down as CEO at year’s end while remaining chairman, this deal may represent one of his final major stamps on the conglomerate’s direction, as highlighted in coverage by AP News.

Posts on X (formerly Twitter) reflect investor enthusiasm, with users like market analysts pointing to Berkshire’s ongoing purchases of Occidental shares—totaling millions in recent years—as a precursor to this full unit buyout, underscoring sustained confidence in the energy play.

Market Reactions and Broader Economic Context

Shares of Occidental rose 1.4% in premarket trading following the news, signaling positive reception despite recent sector volatility. The transaction, expected to close by mid-2026 pending regulatory approvals, positions Berkshire to capitalize on petrochemical demand tied to industrial recovery, even as global chemical margins remain squeezed.

For Occidental, divesting OxyChem is part of a broader deleveraging effort after acquisitions like Anadarko Petroleum in 2019 ballooned its debt. Reuters reported that this sale is the company’s largest divestment to date, allowing a pivot toward shareholder returns, including stock buybacks, as outlined in Reuters.

Potential Challenges and Future Outlook

Challenges loom, including antitrust scrutiny given Berkshire’s size and the concentrated nature of the chemicals industry. Analysts from World Oil suggest that while OxyChem’s standalone value is strong, integrating it into Berkshire’s operations could yield synergies in logistics and supply chains, potentially boosting long-term returns.

This acquisition reinforces Buffett’s value-investing philosophy, targeting assets with durable competitive advantages at reasonable prices. As one of the Oracle of Omaha’s possible swan-song deals, it encapsulates his decades-long approach to building enduring wealth through patient, large-scale bets in familiar industries.