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Berkshire Hathaway, led by Warren Buffett, is reportedly moving forward with a $10 billion acquisition of Occidental Petroleum’s petrochemical unit, OxyChem, according to sources cited by the Wall Street Journal. If completed, the deal would represent Berkshire’s largest transaction since the $11.6 billion Alleghany acquisition in 2022.

A Strategic Move Amid Record Cash Reserves

Berkshire Hathaway currently holds a record $344 billion in cash, giving Buffett and his team significant firepower for large-scale acquisitions. The potential OxyChem deal would strengthen Berkshire’s energy portfolio while leveraging the expertise of CEO-in-waiting Greg Abel, who has deep experience in the energy sector through his leadership of Berkshire Hathaway Energy.

Buffett, 95, has announced he will step down as CEO at the end of 2025 but will continue as chairman of the conglomerate, ensuring his influence on key strategic decisions remains.

Buffett’s History with Occidental

Berkshire already owns a substantial 28.2% stake in Occidental, valued at over $11 billion, but Buffett has consistently stated he does not intend to take full control of the Houston-based oil and gas company. His investment history with Occidental is notable:

• In 2019, Buffett contributed $10 billion to support Occidental’s acquisition of Anadarko Petroleum, receiving preferred shares and warrants in return.
• Beginning in early 2022, Buffett expanded Berkshire’s stake by purchasing Occidental common stock amid the market volatility caused by the Covid-19 pandemic, capitalizing on discounted share prices.

Occidental’s shares dipped 1.8% on Tuesday following the Wall Street Journal report, reflecting investor caution over the new acquisition.

Energy and Dividends

The petrochemical unit, OxyChem, aligns with Berkshire’s broader energy strategy, which includes investments in carbon capture technology and other sustainability initiatives. Occidental also offers a 2% dividend yield, adding steady income potential for Berkshire’s portfolio.

This deal underscores Buffett’s continued focus on long-term value and strategic investments, even as he prepares for a transition in leadership. Analysts see the acquisition as a way to bolster Berkshire’s presence in the energy and industrial sectors while maintaining disciplined capital allocation.