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Berkshire Hathaway (BRK.B) announced an all-cash agreement to acquire Occidental Petroleum’s (OXY) chemical business, OxyChem, for $9.7 bln, its largest deal since the $11.6 bln purchase of Alleghany in 2022. The transaction expands BRK.B’s relationship with OXY, in which it already owns a 28% equity stake, while also giving OXY a significant balance sheet boost through debt reduction and capital return.

• OxyChem produces chemicals for water treatment, vinyl chloride (plastics), calcium chloride (road treatment), and other industrial products.
• OxyChem generated $213 mln in Q2 pretax earnings, flat yr/yr, supported by strong export demand for caustic soda and PVC.
• The acquisition of OxyChem marks BRK.B’s biggest acquisition in two years, reflecting Buffett’s selective M&A activity amid high valuations.
• The transaction also strengthens BRK.B’s portfolio with a steady, cash-generating industrial business that complements its energy and insurance units.
• OXY will use $6.5 bln for immediate debt repayment, plus $1.5 bln after-tax, cutting interest expense by $350 mln annually.
• Proceeds support OXY’s buybacks, dividend growth, and a post-CrownRock debt target below $15 bln.
• The divestiture refocuses OXY on upstream oil and gas, especially in the Delaware Basin, Midland Basin, and New Barnett. OXY's recent Permian sales raised $950 mln for debt reduction.

Briefing.com Analyst Insight:

This deal underscores Buffett’s preference for stable, cash-flowing businesses, with OxyChem offering dependable earnings and global demand tailwinds. OXY, meanwhile, gains balance sheet flexibility, enhances capital returns, and sharpens its oil and gas focus. The structure appears mutually beneficial, though BRK.B’s restraint in deal-making highlights its disciplined approach in a pricey market.