Berkshire Hathaway will acquire Occidental Petroleum’s chemical division for $9.7 billion in a landmark deal that signals the conglomerate’s strategic shift under incoming leadership. The acquisition marks Berkshire’s largest since its $11.6 billion purchase of Alleghany Insurance in 2022 and comes as the company sits on a record $344 billion cash reserve. Vice Chair Greg Abel, who will assume the CEO role in January, led the announcement while Warren Buffett remained notably absent from deal materials.
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Leadership Transition Accelerates
This acquisition represents the first major deal announced under Greg Abel’s visible leadership, with Buffett’s absence from deal materials signaling a deliberate transition. Abel, who Berkshire’s board confirmed as Buffett’s successor in 2021, emphasized the strategic fit in his statement: “Berkshire is acquiring a robust portfolio of operating assets, supported by an accomplished team.” The 61-year-old executive has been preparing for this role since joining Berkshire Energy in 1992 and becoming vice chair in 2018.
Buffett will remain as chairman and continue influencing capital allocation decisions, but this deal demonstrates Abel’s growing operational authority. The timing coincides with Buffett’s planned January CEO transition, though the 95-year-old investor will maintain involvement in major acquisitions. This structured leadership handoff contrasts with the sudden transitions that often disrupt other corporations, reflecting Berkshire’s carefully orchestrated succession plan developed over decades.
Strategic Rationale and Financial Impact
OxyChem brings critical chemical manufacturing capabilities that complement Berkshire’s existing industrial portfolio. The division produces chlorine for water treatment, vinyl chloride for plastics, and calcium chloride for road de-icing—products with stable demand profiles. This aligns perfectly with Berkshire’s long-standing strategy of acquiring businesses with durable competitive advantages and strong cash flow generation.
Financially, OxyChem generated $213 million in pretax earnings during Q2 2025, though this represents a decline from the $300 million it produced in the same period last year. The acquisition will immediately contribute to Berkshire’s operating earnings while deploying a portion of its massive cash reserves. For Occidental, the deal accelerates its debt reduction strategy, with $6.5 billion of proceeds earmarked for lowering obligations toward its $15 billion target following the CrownRock acquisition. Occidental has sold approximately $4 billion in assets since December 2023 to address acquisition-related debt.
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Berkshire’s Growing Energy Footprint
The OxyChem acquisition significantly expands Berkshire’s presence in the energy and chemicals sector, where it already holds substantial assets. The chemical division will operate alongside Lubrizol, which Buffett acquired for $9 billion in 2011, creating synergies in specialty chemicals manufacturing. Berkshire’s energy portfolio already includes Berkshire Hathaway Energy, which operates utilities across multiple states and invests heavily in renewable energy projects.
This deal also deepens Berkshire’s relationship with Occidental, where it already holds a 28% common stock position, $8.5 billion in preferred shares paying 8% dividends, and warrants to purchase additional shares at $59.59 each. The preferred stock originated from Berkshire’s 2019 financing of Occidental’s Anadarko acquisition, demonstrating Buffett’s long-term commitment to the energy sector. Despite these substantial holdings, Buffett has repeatedly told investors he has no plans to acquire all of Occidental.
Market Context and Future Outlook
Berkshire’s massive cash pile has been growing for years as Buffett found few attractive acquisition targets in a market where prices have been driven higher by increased competition from private equity and hedge funds. The OxyChem deal represents a rare opportunity to deploy capital at a reasonable valuation while adding stable, cash-generating assets. The transaction is expected to close in Q4 2025, pending regulatory approvals.
Looking forward, this acquisition may signal Berkshire’s increased focus on industrial and energy investments under Abel’s leadership. As Federal Reserve data shows, corporate cash reserves across American businesses remain near record levels, creating intense competition for quality assets. Berkshire’s ability to complete major deals while maintaining its disciplined approach to valuation will be crucial as Abel prepares to take the helm of the $900 billion conglomerate.
