Warren Buffett's Berkshire Hathaway will buy Occidental Petroleum’s chemicals arm OxyChem for US$9.7 billion (A$14.7 billion) cash.
Their announcement on Thursday confirmed a report in the Wall Street Journal about the sale of OxyChem, a global manufacturer of commodity chemicals used in water treatment, pharmaceuticals, healthcare and commercial and residential development.
Occidental said it expected to use $6.5 billion of the proceeds to reduce debt below $15 billion as planned following its acquisition of CrownRock.
“This transaction strengthens our financial position and catalyses a significant resource opportunity we’ve been building in our oil and gas business for the last decade,” Occidental President and Chief Executive Officer Vicki Hollub said in a news release.
She said the sale would unlock more than 20 years of low-cost resource “runway” and deliver meaningful near and long-term value.
“Berkshire is acquiring a robust portfolio of operating assets, supported by an accomplished team,” Berkshire Hathaway Vice Chairman of Non-Insurance Operations Greg Abel said in the release.
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 transaction was expected to close in the fourth quarter of 2025, subject to regulatory approvals and other customary closing conditions.
It would be the biggest purchase for Berkshire since its $11.6 billion buyout of insurance firm Alleghany Corporation in 2022 and expand its chemical portfolio beyond Lubrizol.
Berkshire is also Occidental's largest shareholder and it started building its stake in February 2022 when Russia invaded Ukraine.
Occidental (NYSE: OXY) shares closed $3.49 (7.31%) lower at $44.23 on Thursday (Friday AEST), capitalising the company at $43.54 billion, before rising to $44.53 in after-hours trading.
Berkshire Hathaway class B shares (NYSE: BRK.B) closed down $2.42 (0.49%) at $495.92, implying a market capitalisation for the investment company of $1.07 trillion.
