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Warren Buffett’s Berkshire Hathaway is closing in on a $10bn deal to buy the petrochemical division of Occidental Petroleum in what would be the conglomerate’s largest transaction in three years.
Talks between the parties are at an advanced stage and could be completed within days, according to two people familiar with the matter.
The Financial Times on Sunday reported that Houston-based Occidental was in late-stage talks to sell its OxyChem division as part of a divestment process designed to reduce the company’s $24bn debt load.
Buffett is already the largest shareholder in Occidental, which is one of the largest oil and gas producers in the US.
The 95-year-old investor, who is poised to step down as Berkshire’s chief executive at the end of 2025, has amassed a massive cash pile of almost $350bn at the conglomerate.
If Buffett closes a deal to buy OxyChem it would be Berkshire’s largest acquisition since it bought the insurance group Alleghany for $11.6bn in 2022.
Buffett has been a long-term supporter of Occidental. In 2019 the conglomerate backed the oil company’s $55bn bid for rival Anadarko Petroleum, pledging to invest $10bn to finance the deal.
Berkshire owns 26.9 per cent of Occidental’s outstanding shares. Buffett’s conglomerate does not plan to pay for OxyChem using Occidental stock, according to a person familiar with the matter.
Berkshire and Occidental did not immediately respond to a request for comment. The Wall Street Journal was first to report that Berkshire Hathaway was the potential buyer.
Occidental’s OxyChem division generated almost $5bn in revenues in the 12 months to the end of June. Occidental’s market capitalisation stood at about $46.5bn at market close on Tuesday.
Occidental has for several years been grappling with a large debt burden, a result of its $55bn acquisition of Anadarko Petroleum and the $13bn acquisition of shale oil producer CrownRock in 2023.
Occidental’s shares have underperformed over the past 12 months — shedding about 8 per cent to close at $47.25 on Tuesday — as a result of falling oil prices and concerns about the company’s debt burden.
Over the same period, Wall Street’s benchmark S&P 500 index has risen by more than 15 per cent.
Cole Smead, chief executive at Smead Capital Management, which owns shares in Occidental, said the company’s decision to sell its petrochemical unit was a good one as it would reduce debt and enable the group to pursue acquisitions to bulk up its core oil and gas businesses.
“This lowers the leverage at Occidental and prepares them to go out and be one of the consolidators of the oil and gas business. We think the next move would be an all-stock deal for a peer,” he said. “Does Occidental want to become the fourth US major with a focus on upstream like ConocoPhillips? We think they should.”
Additional reporting by Eric Platt
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