Warren Buffett’s Berkshire Hathaway Inc. reached a deal to buy Occidental Petroleum Corp.’s petrochemical business for about $9.7 billion in cash.
The deal is the latest evidence that Buffett appears back on the hunt after years of refraining from large takeovers and progressively unwinding large holdings like his stake in Apple Inc.
The transaction is expected to close in the fourth quarter, Berkshire said Thursday in a statement. Shares of Occidental rose 1.4% in premarket trading in New York, while Berkshire’s Class B stock was down 0.3%.
OxyChem is set to be Berkshire’s largest acquisition since it took over the insurer Alleghany Corp. in 2022 for $13.7 billion, according to data compiled by Bloomberg. Buffett’s cash pile totaled $344 billion at the end of June, close to a record.
Occidental, which is about 27% owned by Berkshire, had already announced almost $4 billion of asset sales since the start of last year as it works to pay down debt in the wake of its $10.8 billion takeover of rival CrownRock LP. The company said it expects to use $6.5 billion of the proceeds from the OxyChem sale to reduce its principal debt to less than $15 billion.
OxyChem makes basic chemicals including chlorine and sodium hydroxide. The proposed sale to Berkshire comes as oil producers are trying to boost efficiency to counter slowing output growth in the Permian Basin of West Texas and New Mexico — the biggest US shale basin — now that the best sites have already been drilled.
The deal marks the end of a long chapter for Occidental, which entered the chemicals business decades ago but has seen declining annual sales for that unit over the past few years.
In August, Occidental cut its full-year forecast for OxyChem’s pre-tax income about 15% to a range of $800 million to $900 million due to a market oversupply of key products.
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