Warren Buffett is reportedly eyeing Berkshire Hathaway’s biggest deal in three years

Warren Buffett’s Berkshire Hathaway is in the final stages of negotiations to acquire Occidental Petroleum’s petrochemical unit OxyChem for approximately $10 billion, as reported by the Wall Street Journal. This potential deal, expected to be finalized within days, could mark Berkshire’s largest acquisition since 2022 when it purchased insurer Alleghany for $11.6 billion. With a record cash reserve of $344 billion, Berkshire is well-positioned to make this substantial investment.

At 95 years old, Buffett is set to step down as CEO of Berkshire at the end of 2025, with Greg Abel, the current CEO of Berkshire Hathaway Energy, slated to succeed him. Abel’s extensive experience in the energy sector makes him a fitting choice to lead the conglomerate into the future. Despite the impending leadership transition, Buffett will continue to serve as chairman of Berkshire Hathaway.

Occidental Petroleum’s stock saw a 1.8% decline on Tuesday following the news of Berkshire’s potential acquisition. Berkshire currently holds over $11 billion worth of Occidental stock, representing a 28.2% stake in the company. Buffett has previously expressed his intention not to take full control of Occidental, which was founded by renowned oil tycoon Armand Hammer.

In 2019, Buffett played a pivotal role in financing Occidental’s acquisition of Anadarko Petroleum by committing $10 billion and receiving preferred shares and warrants in return. He began purchasing Occidental common stock in early 2022 after analyzing the company’s earnings conference call transcript. Seizing the opportunity presented by market volatility during the Covid pandemic, Buffett acquired shares at a discounted price.

Occidental Petroleum also offers a 2% dividend yield and has been actively investing in a carbon capture business. This strategic focus on sustainability aligns with Berkshire Hathaway’s values and long-term investment approach. For further details on this developing story, you can refer to the original Wall Street Journal article.

As Berkshire Hathaway continues to expand its portfolio and solidify its position in the market, the acquisition of Occidental Petroleum’s petrochemical unit represents a significant milestone in the conglomerate’s growth trajectory. Stay tuned for more updates on this exciting development in the world of finance and investment.