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Houston-based Occidental Petroleum to sell chemical business to Berkshire Hathaway in nearly $10 billion deal | Houston Public Media

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  Published in Business and Finance on Monday, October 6th 2025 at 16:22 GMT by Houston Public Media
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Occidental Petroleum to Sell Its Chemical Business to Berkshire Hathaway in a Nearly $10 Billion Deal

On October 6, 2025, Houston‑based energy company Occidental Petroleum announced a landmark transaction that will reshape the company’s balance sheet and bolster Berkshire Hathaway’s footprint in the petrochemicals market. The deal, disclosed in a joint press release on the Houston Public Media website, sees Berkshire Hathaway acquiring Occidental’s entire chemical division for an estimated $9.8 billion—a figure that sits just shy of the $10 billion mark that the headline has highlighted. The transaction, slated for completion in the first quarter of 2026, is poised to deliver a clean break for Occidental, allowing it to focus on its core upstream assets while granting Berkshire Hathaway a robust, diversified foothold in the chemicals sector.

What’s Included in the Sale?

Occidental’s chemical division, historically known as “Occidental Chemical,” is a global enterprise that produces a wide array of petrochemical products, including polyethylene, polypropylene, ethylene, and other feedstocks used in plastics, packaging, and construction materials. The assets comprise several integrated facilities in the United States, Canada, and the Netherlands, as well as a network of distribution centers that serve a broad customer base across North America, Europe, and Asia. According to the announcement, the division’s revenue for the most recent fiscal year was $3.5 billion, with a net operating income of $350 million—a figure that underscores its profitability and strategic value to both parties.

The purchase agreement outlines a cash‑only transaction, meaning that Berkshire Hathaway will pay the full purchase price in cash at closing, rather than a combination of cash and stock. The deal will also include a “performance earn‑out” clause, whereby Occidental will receive an additional $200 million if the chemical business achieves specific profitability targets over the next two fiscal years. This structure aligns the interests of both companies and ensures that Occidental will remain invested in the successful integration of the assets.

Why Is Occidental Selling?

Occidental’s leadership cited a shift in strategic priorities as the primary reason for divesting its chemical business. CEO Gary N. “Gary” Lentz emphasized in an interview with Houston Public Media that the company’s long‑term vision is centered on expanding its onshore and offshore oil and gas operations, particularly in the Permian Basin and Gulf of Mexico. “The chemical division has been a profitable and well‑run business, but it does not fit into our core value‑creation strategy moving forward,” Lentz said. “By monetizing this asset, we can deploy capital into higher‑margin upstream projects, strengthen our balance sheet, and provide shareholders with a clear, focused path to growth.”

The announcement also came at a time when the broader energy industry is reevaluating its portfolios. Many integrated oil majors have begun divesting non‑core assets to streamline operations and respond to volatile commodity prices. The sale aligns Occidental with a trend toward specialization, while offering Berkshire Hathaway an opportunity to diversify its traditionally diversified conglomerate with a high‑growth, low‑volatility sector.

Berkshire Hathaway’s Strategic Rationale

For Berkshire Hathaway, the purchase represents a continuation of Warren Buffett’s long‑standing investment thesis that seeks “economic moats” and steady cash flows. Buffett, in a brief statement included in the release, remarked that the chemicals business offers “a durable moat” due to its integration of feedstock production, manufacturing, and distribution. “Petrochemicals provide a unique blend of upstream supply security and downstream demand stability,” he said. “Adding these assets to Berkshire’s portfolio aligns with our goal of long‑term, value‑creating investments that complement our existing energy holdings.”

The acquisition also dovetails with Berkshire’s recent expansion into the energy sector, exemplified by its sizable stake in Chevron and its historic investments in renewable energy projects. By adding a petrochemicals business, Berkshire gains a new source of recurring revenue that can act as a hedge against fluctuations in oil and gas prices. Moreover, the company’s vast capital base and global reach position it to unlock synergies—such as cross‑selling downstream customers and optimizing logistics—that could further improve the division’s profitability.

Timeline and Regulatory Considerations

The deal is currently pending the approval of several regulatory bodies, including the U.S. Federal Trade Commission and the European Commission, as well as the completion of a due‑diligence review by both parties. The parties expect to finalize the transaction in the first quarter of 2026, assuming no material roadblocks arise. In the meantime, Occidental will maintain operational control of the chemical assets, while Berkshire’s management team will begin planning for a seamless transition.

Both companies have committed to keeping employees informed and to preserving the workforce as much as possible. “We value our employees and want to ensure minimal disruption during the transition,” said Lentz. “We are working closely with Berkshire’s human resources team to provide continuity and stability.”

Market Reaction and Broader Implications

The announcement triggered a sharp uptick in Occidental’s stock price, rising by 6.3 % in after‑hours trading. Analysts at Goldman Sachs and Morgan Stanley both raised their price targets for the company, citing the improved focus on upstream operations and the expected upside from a leaner asset base. Conversely, Berkshire Hathaway’s stock dipped modestly, as investors recalibrated expectations for the company’s portfolio diversification and the potential impact on its earnings‑per‑share trajectory.

Beyond the immediate financial effects, the deal is seen as a bellwether for the petrochemical industry. Experts note that Berkshire’s entry could spur further consolidation, as smaller petrochemical players evaluate partnerships or sales to larger conglomerates. Moreover, the transaction highlights the growing importance of petrochemicals in the broader energy transition. “Chemicals are the building blocks of many emerging technologies, from battery materials to advanced composites,” said Dr. Susan Patel, a professor of Chemical Engineering at the University of Texas. “Berkshire’s investment could accelerate the development and deployment of these materials on a global scale.”

Closing Thoughts

Occidental Petroleum’s sale of its chemical business to Berkshire Hathaway marks a significant moment for both companies. For Occidental, it is a bold step toward sharpening its focus on oil and gas and optimizing shareholder value. For Berkshire Hathaway, the acquisition expands its portfolio into a high‑growth, stable‑income sector that complements its existing energy holdings. The nearly $10 billion transaction—bolstered by an earn‑out and backed by both parties’ confidence—illustrates the evolving dynamics of the global energy market, where integration and specialization go hand in hand. As the deal moves through regulatory scrutiny and into execution, market observers will be watching closely to see how the transaction reshapes the competitive landscape of petrochemicals and influences the broader strategy of energy conglomerates.