Buffett's Berkshire Hathaway Buys Occidental's OxyChem for $10 Billion
Warren Buffett's Berkshire Hathaway has made a significant move in the energy sector. It has agreed to acquire Occidental Petroleum's petrochemical business, OxyChem, for around $10 billion. This deal comes after years of Buffett's cautious approach to investments and marks his second major bet on the chemicals industry.
The acquisition of OxyChem, which generated nearly $5 billion in sales and is expected to bring in $800 million to $900 million in pretax income this year, is Berkshire's largest deal since it bought Alleghany Corp. in 2022 for $13.7 billion. This move also follows Buffett's recent deals, including a $1.6 billion bet on UnitedHealth Group Inc.
Buffett's interest in Occidental was sparked when its CEO, Vicki Hollub, visited him in 2019. This led to Berkshire purchasing $10 billion of preferred shares in Occidental, which Buffett reportedly bought at a discount during the COVID-19 pandemic's heightened volatility. Berkshire's investment helped finance Hollub's efforts to acquire Anadarko Petroleum against Chevron. Occidental later announced the sale of gas pipeline and other infrastructure to Enterprise Products Partners.
The acquisition of OxyChem by Berkshire Hathaway is set to close in the fourth quarter of 2023. This deal, Buffett's second major bet on the chemicals industry after acquiring Lubrizol for nearly $10 billion in 2011, comes as Buffett, now 95, prepares to step down as Berkshire CEO at the end of 2025, with Greg Abel set to succeed him.
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