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Buffett identified as ‘victor’ in what might be his final significant buy as CEO
Berkshire Hathaway has struck a deal to shell out $9.7 billion in cash for OxyChem, Occidental Petroleum’s chemical division.
This may well be Warren Buffett’s final major purchase before he vacates his CEO position at the end of the year.
It representsBerkshire’s largest transaction since it invested $11.6 billion in the insurer Allegheny in 2022, yet it does not qualify as the monumental “elephant” that Buffett has been seeking to make a meaningful impact on the company’s approximately $340 billion in cash balance as of the end of June.
This acquisition enhances an already strong bond between the firms: Berkshire is the largest shareholder of Occidental owning a stake of nearly 27% currently valued at $11.9 billion.
Furthermore, Occidental is distributing an 8% dividend on more than $8 billion in preferred shares owned by Berkshire, following what was, in essence, a loan to assist OXY in acquiring Anadarko Petroleum in 2019.
As part of that arrangement, Berkshire also holds warrants allowing it to purchase nearly 84 million additional OXY common shares for slightly below $60 per share, exceeding their current trading price of just under $45.
Despite these connections, Buffett informed shareholders two years ago that Berkshire would not pursue a complete acquisition of Occidental.
In a live segment on CNBC’s “Squawk Box” the morning of the announcement, CEO Vicki Hollub mentioned that $6.5 billion of the OxyChem purchase would be directed towards debt reduction, bringing it beneath the $15 billion target accomplished after it acquired Permian Basin producer CrownRock for $12 billion at the end of 2023.
“Now we’re ready to resume our share buyback program …
“What we needed was to enhance our balance sheet. So this represents that final major step, and I believe we are poised for rapid value creation for our shareholders.”
Wall Street’s perspective is less optimistic than Hollub’s regarding the deal.
Occidental Petroleum shares dipped by as much as 8.1% on Thursday, the day the deal was revealed, but later recovered slightly, ending the week with a 5.5% decline.
Barron’s is straightforward in its evaluation: “A notch in favor of Warren Buffett at the cost of Occidental Petroleum CEO Vicki Hollub.”
The article claims the acquisition price “may be a steal due to this year’s low sector earnings” and are projected to increase.
Moreover, Occidental will be relinquishing a chemical division that set it apart from its energy competitors.
It will also encounter a $1.7 billion tax burden that could have been avoided if Berkshire had utilized its OXY preferred shares for the transaction, as some had expected.
This implies Occidental will likely continue to disburse over $600 million annually to Berkshire in dividends until the preferred shares are scheduled for redemption in 2029.
Fortune, contrarily, emphasizes the advantages for Occidental of decreasing its debt burden.
It cites Wolfe Research analyst Doug Leggate labeling the deal a “win-plus for Berkshire since it also benefits the company they own [approximately] 30% of. It’s entirely self-serving, logical, and—not in any malicious manner—definitely advantageous.”
This was the approach Berkshire’s Greg Abel utilized in the announcement release that interestingly never referred to Buffett by name.
“We applaud Vicki and the Occidental leadership for their dedication to the long-term financial soundness of Occidental, as indicated by their strategy to use the funds to strengthen the company’s balance sheet.”
Berkshire takes formal action to gear up for Abel’s new role
Berkshire Hathaway’s board of directors has amended the company’s by-laws to split the positions of chairman and CEO.
An SEC filing made today (Friday) reveals that the board voted to implement the changes on Tuesday, nearly three months prior to current Vice Chairman of Non-Insurance Operations Greg Abel stepping into the CEO role on January 1.
As Warren Buffett stated in May upon announcing his intention to relinquish the CEO position, he will continue as chairman of the board.
Buffett bust auctioned for charity
Warren Buffett is no longer gathering millions for charity by auctioning the chance to dine with him as he has historically done.
However, a bronze bust of him was sold this week for $26,201 in an eBay auction organized by Mohnish Pabrai, an investor who calls himself an “ardent disciple” of Buffett.
The sale proceeds benefit the Dakshana Foundation, which provides entrance exam coaching for higher education to underprivileged students in rural India as part of poverty alleviation efforts.
BUFFETT AROUND THE WEB
Some links may require a subscription:
- CNBC Pro (subscription): Warren Buffett’s investment in Japan, discovered from a ‘little handbook’, has increased up to sixfold
- CNBC Make It: Jim Cramer disagrees with Warren Buffett on this classic investing principle—here’s the reasoning
- Bloomberg Opinion (subscription): Warren Buffett to determine when a rail acquisition is appropriate
HIGHLIGHTS FROM THE ARCHIVES
Elevating a small business (2008)
Warren Buffett discusses how consistency helped him and Charlie Munger gradually transform Berkshire Hathaway into its current state.
BERKSHIRE STOCK MONITOR
Four weeks
Twelve months
BERKSHIRE’S LEADING STOCK HOLDINGS – Oct. 3, 2025
Berkshire’s primary holdings of publicly disclosed stocks in the U.S., Japan, and Hong Kong, ranked by market value, according to today’s closing prices.
Holdings as of June 30, 2025, as documented in Berkshire Hathaway’s 13F form submitted on August 14, 2025, with the exception of:
- Itochu as of March 17, 2025, and Mitsubishi as of August 28, 2025. Tokyo Stock Exchange prices have been converted to U.S. dollars from Japanese yen.
The complete list of holdings and their current market values can be accessed via CNBC.com’s Berkshire Hathaway Portfolio Tracker.
QUESTIONS OR FEEDBACK
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Additionally, Buffett’s annual letters to shareholders are highly recommended for reading. They are collected here on Berkshire’s website.
— Alex Crippen, Editor, Warren Buffett Watch
