Berkshire Hathaway Acquires $9.7 Billion OxyChem

Berkshire Hathaway Inc. (BRK.A) has announced a definitive agreement to acquire Occidental Petroleum Corp.’s (OXY) chemical business, OxyChem, in an all-cash transaction valued at $9.7 billion, sending ripples through the market and impacting both companies' stock performance. The deal, expected to close in the fourth quarter of 2025, marks a significant strategic move for both entities.

Following the announcement, Berkshire Hathaway's stock experienced a modest uptick, reflecting the market's generally positive sentiment towards the acquisition. The markets view the deal as a strategic deployment of Berkshire's substantial cash reserves into a stable, cash-generating asset. In contrast, Occidental's stock saw a marginal increase, driven by the anticipated debt reduction facilitated by the sale.

Under the terms of the agreement, Occidental will receive $9.7 billion in cash, subject to customary purchase price adjustments. Occidental intends to allocate approximately $6.5 billion of the proceeds to reduce its debt burden, which stood at $23.34 billion as of June 2025. This debt primarily stems from major acquisitions, including the $55 billion purchase of Anadarko Petroleum in 2019 and the more recent $12 billion acquisition of CrownRock. The divestiture of OxyChem is a crucial step in Occidental's plan to reduce its principal debt below $15 billion, a target established following the CrownRock acquisition. Retaining OxyChem's legacy environmental liabilities, managed by Glenn Springs Holdings Inc., ensures a streamlined transition for Berkshire Hathaway.

For Berkshire Hathaway, this acquisition represents its largest deal since acquiring Alleghany Corporation for $11.6 billion in 2022. OxyChem, a producer of essential chemicals used in water treatment, pharmaceuticals, healthcare, and construction, will complement Berkshire's existing chemical holdings, such as Lubrizol, acquired in 2011 for $9 billion. The addition of OxyChem is anticipated to strengthen Berkshire's industrial portfolio and contribute to its long-term growth strategy.

Market analysts have offered varied perspectives on the acquisition. Some believe Berkshire Hathaway is strategically utilizing its substantial cash reserves to acquire a stable, cash-generating business. Conversely, some analysts suggest that Occidental may be undervaluing OxyChem by selling a diversified asset, especially if chemical industry margins recover. However, the immediate benefit of debt reduction for Occidental is widely regarded as a positive step toward financial stability.

The acquisition of OxyChem by Berkshire Hathaway is poised to have significant implications for both companies. Occidental's strategic focus on debt reduction and streamlining its core operations, combined with Berkshire's expansion within the chemical sector, highlights the evolving nature of corporate strategies in response to financial and market conditions. The deal is subject to regulatory approvals and customary closing conditions, with an expected completion date in the fourth quarter of 2025.

The market's reaction to this deal will be determined by Berkshire Hathaway's ability to successfully integrate OxyChem into its existing portfolio and Occidental's success in executing its debt reduction strategy. The acquisition underscores the dynamic interplay between corporate strategies and market conditions, setting the stage for potentially impactful shifts in the chemical industry.