Berkshire Hathaway and Occidental Petroleum have entered into a definitive agreement for Berkshire Hathaway to acquire Occidental’s chemical division, known as OxyChem, in an all-cash transaction valued at $9.7 billion, with adjustments to the purchase price reflecting standard industry practices. This agreement is subject to customary purchase price adjustments that are typical in large transactions of this nature.
OxyChem is recognized as a leading global manufacturer of essential commodity chemicals, which are crucial for various applications that significantly improve the quality of life. These applications include water treatment processes, pharmaceutical production, healthcare solutions, and development projects in both commercial and residential sectors.
Occidental has indicated that it intends to use approximately $6.5 billion of the proceeds from this sale to pay down its existing debt. This action is in line with the company’s strategy to achieve a principal debt level below $15 billion, a target they set following the December 2023 announcement of their acquisition of CrownRock.
Importantly, an Occidental subsidiary will retain responsibility for OxyChem’s legacy environmental liabilities, ensuring that these ongoing obligations are managed appropriately. Additionally, Glenn Springs Holdings, a company affiliated with Occidental, will continue to oversee the management of ongoing remedial projects related to these liabilities, ensuring compliance with environmental standards.
The closing of this transaction is projected to occur in the fourth quarter of 2025, pending receipt of necessary regulatory approvals and satisfaction of other customary closing conditions that are standard in transactions of this scale.
Advisors: Occidental’s financial advisor is Barclays, and its legal counsel is Cravath, Swaine & Moore.
KEY QUOTES:
“This transaction strengthens our financial position and catalyzes a significant resource opportunity we’ve been building in our oil and gas business for the last decade. I’m incredibly proud of the impressive work the team has done to create this strategic opportunity that will unlock 20+ years of low-cost resource runway and deliver meaningful near and long-term value. OxyChem has grown under Occidental into a well-run, safely operated business with best-in-class employees, and we are confident the business and those employees will continue to thrive under Berkshire Hathaway’s ownership.”
Vicki Hollub, President and Chief Executive Officer
“Berkshire is acquiring a robust portfolio of operating assets, supported by an accomplished team. We look forward to welcoming OxyChem as an operating subsidiary within Berkshire. We commend Vicki and the Occidental team for their commitment to Occidental’s long-term financial stability, as demonstrated by their plan to use proceeds to reinforce the company’s balance sheet.”
Greg Abel, Vice Chairman of Non-Insurance Operations at Berkshire
