Berkshire Hathaway Inc has signed a definitive agreement to acquire Occidental Petroleum Corp’s (Occidental) chemical business for $9.7 billion in cash.
Warren Buffett-led holding company Berkshire will buy all the issued and outstanding equity interests of Occidental Chemical Corp (OxyChem), Occidental said in filings with the United States Securities and Exchange Commission (SEC).
Buffett already owns 32.7 percent of Occidental’s common stock, including warrants, as disclosed by Buffett to the SEC August 14.
The divestment is part of Houston, Texas-based Occidental’s efforts to keep debt manageable following its acquisition of CrownRock LP, completed in the third quarter of 2024 for about $12.4 billion.
“Occidental expects to use $6.5 billion of the transaction proceeds to reduce debt and achieve the target of principal debt below $15 billion set following the December 2023 announcement of its CrownRock acquisition”, said a joint statement by Occidental and Berkshire.
Occidental expects to cut over $350 million in annual interest expense as a result of the sale, according to a separate investor presentation published on Occidental’s website.
“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”, Occidental president and chief executive Vicki Hollub said in the statement by the companies.
“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”.
Greg Abel, vice chair for non-insurance operations at Berkshire, said, “We look forward to welcoming OxyChem as an operating subsidiary within Berkshire”.
The parties expect to close the transaction in the fourth quarter, subject to customary closing conditions including federal antitrust clearance.
Occidental will retain OxyChem’s legacy environmental liabilities, the joint statement said.
OxyChem is a global manufacturer of chemicals used in water treatment, pharmaceuticals, healthcare and commercial and residential development, according to Occidental.
Concurrently Occidental announced the promotion of Richard A. Jackson to senior vice president and chief operating officer, “overseeing global oil and gas operations, low-carbon integrated technologies and the midstream and marketing and health, safety and environment functions”.
“Richard is a proven leader who has demonstrated success growing Oxy’s U.S. onshore oil and gas operations and launching Oxy’s low-carbon integrated technologies to support our CO2 and power value proposition”, Occidental chair Jack Moore said in a statement on Occidental’s website.
“Oxy has a tremendous resource position and capability as we continue to advance our subsurface characterization and cost efficiencies for near- and long-term value”, Jackson said.
Jackson, who holds a Bachelor of Science in Petroleum Engineering from Texas A&M University, serves on the Oil and Gas Climate Initiative’s Climate Investment Board and the American Petroleum Institute’s Upstream Committee, Occidental noted.
New Berkshire CEO
Meanwhile at Berkshire, Abel will replace Buffett as chief executive from January 2026 while Buffett will remain as chair.
Berkshire confirmed the leadership change in a SEC filing October 3 after its board voted last month to no longer allow the same person to be chair and CEO at the same time.
Abel will also be president when he becomes CEO.
To contact the author, email jov.onsat@rigzone.com
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