Buffett’s Berkshire Nears $10B OxyChem Buyout as Occidental Sharpens Deleveraging Push

Berkshire lines up ~$10B purchase of OxyChem; closing could come within days

Warren Buffett’s Berkshire Hathaway is in advanced talks to acquire Occidental Petroleum’s petrochemical arm OxyChem for about $10 billion, according to multiple reports citing people familiar with the matter. The prospective sale is part of Occidental’s broader effort to simplify its portfolio and reduce leverage after a series of large acquisitions. A deal could be finalized within days, the reports said.

What OxyChem is, and why Berkshire wants it

OxyChem produces basic and specialty chemicals used across water treatment, construction materials, paper, packaging and industrial supply chains. For Berkshire, which already owns Lubrizol (acquired in 2011), OxyChem would deepen a durable, cash-generative chemicals platform under the conglomerate’s industrial umbrella, consistent with Buffett’s preference for businesses with stable demand and strong free cash flow. Recent reports indicate OxyChem generated roughly $2.4 billion in revenue in 1H 2025 (nearly $5 billion over the past year), suggesting solid scale even through a cyclical patch for chemicals.

Occidental’s rationale: debt, focus and optionality

Occidental has been selling non-core assets to cut debt and focus on upstream oil & gas after its $55 billion Anadarko purchase (2019) and the ~$12 billion CrownRock deal (closed recently). As of June 2025, total debt stood around $23–24 billion, and shedding OxyChem would further streamline the balance sheet while simplifying corporate structure. Management has telegraphed continued portfolio pruning to align capital allocation with higher-return barrels and carbon-management initiatives.

The ownership knot: Berkshire is already OXY’s largest shareholder

Berkshire holds roughly 27–28% of Occidental’s shares, making this a related-party adjacent transaction even though OxyChem is being carved out from a company Berkshire partly owns. Governance observers will watch for independent board processes, fairness opinions and arm’s-length valuation mechanics to ensure minority OXY shareholders are protected. The deal would be Berkshire’s largest since Alleghany (2022), and it comes as the conglomerate sits on a record cash pile north of ~$340 billion.

Valuation lens: what ~$10B implies for chemicals cyclicals

A headline enterprise value of ~$10B implies a mid-cycle multiple that acknowledges chemicals’ earnings volatility while pricing OxyChem’s footprint and cash conversion. Investors will parse: (1) peak-to-trough EBITDA assumptions; (2) normalized capex for maintenance and growth; and (3) chlorine/caustic soda and vinyls cycle positioning. Berkshire’s history suggests it is comfortable underwriting through-cycle returns rather than timing near-term price spikes.

Market impact: who gains, who gives ground

• Occidental (OXY): Proceeds accelerate deleveraging and could support a steadier capital-return cadence; reduced conglomerate complexity may aid the equity multiple. Near-term, loss of OxyChem’s diversification could slightly increase upstream beta. (Analytical read-through based on reported terms.)
• Berkshire (BRK): Deploys cash into a real-asset, cash-rich business, broadening its industrial earnings base. Chemicals add ballast alongside BNSF, energy and manufacturing, while preserving optionality for future buys.
• Chemicals peers: A Berkshire-owned OxyChem could become a long-term consolidator, nudging valuation support across selected chlor-alkali and vinyls names, especially as balance-sheet stability meets cycle sensitivity. (Inference grounded in sector structure.)
• Credit markets: Asset-sale proceeds are credit-positive for OXY; rating agencies will weigh debt paydown versus any residual structural subordination after divestiture.

Strategic fit: Berkshire’s “own forever” playbook

Buffett (and successor-in-waiting Greg Abel) favor operating companies with moats, scale and recurring cash flow. OxyChem’s integration into Berkshire would mirror the conglomerate’s approach with Lubrizol, run independently, invest rationally, and avoid market-timing churn. The purchase also aligns with Berkshire’s tendency to prefer entire businesses over minority stakes when price and quality intersect.

Governance & antitrust: items to watch

• Special committee process at OXY and third-party fairness opinions given Berkshire’s equity stake in the seller.
• Regulatory review: Chemicals M&A is typically manageable absent horizontal overlaps; scrutiny should focus on safety, environmental liabilities and localized market concentration, not big-tech-style antitrust.
• Transaction structure: Expect a clean cash deal with standard environmental reps and indemnities; minimal financing contingencies are likely given Berkshire’s liquidity.

Execution risks and sensitivities

• Chemicals cycle: If pricing softens further in chlor-alkali or vinyls, pro forma earnings could dip versus deal models, more a Berkshire risk than an OXY one post-sale.
• Separation frictions: Transitional service agreements (IT, HR, procurement, shared sites) must be well-crafted to avoid value leakage.
• Closing timeline: Reports say “within days”, any slip tied to diligence or environmental items would be a watchpoint.

How the tape could trade near-term

Historically, seller stocks with clear deleveraging use-of-proceeds tend to outperform into close, while the buyer’s shares are usually steady when cash is abundant and dilution is nil. Chemicals comps may see read-through bids on the prospect of a Berkshire-anchored platform and potential portfolio rationalizations post-close. (Pattern analysis; confirm against closing specifics when filed.)