MW Why Warren Buffett's Berkshire Hathaway may be placing another bet in petrochemicals

By Claudia Assis

Occidental would sell chemicals business for about $10 billion, WSJ reports

Warren Buffett's Berkshire Hathaway would spend about $10 billion to buy Occidental's chemicals business.

Warren Buffett's Berkshire Hathaway Inc. is the suitor for Occidental Petroleum Corp.'s petrochemicals business, according to a Wall Street Journal report late Tuesday.

Berkshire $(BRK.A)$ $(BRK.B)$ would buy OxyChem, as the business is known, for about $10 billion in a deal that could materialize in days, the report said, citing people familiar with the matter.

The deal would be Berkshire's largest since 2022, when it bought a reinsurance company for nearly $12 billion. It also would be the second time Berkshire placed a bet on petrochemicals: It bought specialty-chemicals maker Lubrizol Corp. in 2011, in a deal valued at almost $10 billion at the time.

The Financial Times reported Sunday that Occidental was in talks to sell the business for $10 billion, but did not name the buyer.

Berkshire already is Occidental's $(OXY)$ top shareholder, with a stake of about 28% valued at nearly $13 billion, according to FactSet. OxyChem accounted for about 18% of Occidental's 2024 sales, or $4.92 billion out of total sales of $26.73 billion.

Occidental's oil and gas business brings the lion's share of sales, or about $22 billion last year. Analysts polled by FactSet estimate $4.90 billion in sales for the petrochemicals division this year, out of $26.74 billion total for the year.

For Occidental, the appeal of a sale is easier to see. A $10 billion deal would "come as surprise" to markets, as investors expected Occidental to hold onto the assets, analysts at TPH & Co said in note.

If it materializes, a transaction at that price tag "would be helpful in taking down leverage and would be above our carrying value of [about $8.3 billion]," the analysts said.

"Additionally, at least in 2025, the asset will not generate significant [free cash flow]" as Occidental has already lowered its outlook for pre-tax income to between $800 million and $900 million while maintaining relatively high spending, the analysts said.

Berkshire last month unveiled new positions in UnitedHealthcare Group Inc. $(UNH)$ and homebuilder D. R. Horton Inc. $(DHI)$, and went deeper into other homebuilding and home-related companies.

Occidental shares have lost 4.4% so far this year, contrasting with gains of about 14% for the S&P 500 index SPX.

-Claudia Assis

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September 30, 2025 17:22 ET (21:22 GMT)

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