(This is the Warren Buffett Watch newsletter, news and analysis on all things Warren Buffett and Berkshire Hathaway. You can sign up here to receive it every Friday evening in your inbox.)
Buffett seen as ‘winner’ in what may be his last big buy as CEO
Berkshire Hathaway has a deal to pay $9.7 billion in cash to buy OxyChem, Occidental Petroleum’s chemical business.
It could be Warren Buffett’s last major acquisition before he gives up his CEO role at the end of the year.
It is Berkshire’s biggest deal since it paid $11.6 billion for insurer Allegheny in 2022, but it is not the enormous “elephant” that Buffett has been hunting for that would put a significant dent in the company’s roughly $340 billion in cash as of the end of June.
The deal builds on an already close relationship between the companies: Berkshire is Occidental’s largest shareholder with a stake of almost 27% currently valued at $11.9 billion.
In addition, Occidental is paying an 8% dividend on more than $8 billion in preferred shares held by Berkshire after what was, in effect, a loan to help OXY buy Anadarko Petroleum in 2019.
As part of that deal, Berkshire also now holds warrants to buy nearly 84 million additional OXY common shares for just under $60 per share, which is higher than their current price just under $45.
Despite those ties, Buffett told shareholders two years ago Berkshire will not try to acquire Occidental in its entirety.
In a live interview on CNBC’s “Squawk Box” the morning of the announcement, CEO Vicki Hollub said it will use $6.5 billion of the OxyChem purchase price to reduce its debt, bringing it below the $15 billion target set when it bought Permian Basin producer CrownRock in late 2023 for $12 billion.
“Now we’re going to be able to start our share repurchase program again …
“The thing that we needed to do was improve our balance sheet. So this is that last big step that we need and now I think we’re off and running to value creation that’s going to come at a much faster pace for our shareholders.”
Wall Street isn’t as positive as Hollub is about the deal.
Occidental Petroleum shares fell as much 8.1% on Thursday, the day of the announcement, but then bounced back a bit to close out the week with a 5.5% drop.
Barron’s is blunt in its assessment: “Score one for Warren Buffett at the expense of Occidental Petroleum CEO Vicki Hollub.”
It says the purchase price “could be a bargain because earnings in the sector are depressed this year” and are expected to head higher.
In addition, Occidental will be losing a chemical business that helped differentiate it from energy rivals.
It will also be facing a $1.7 billion tax hit that would have been eliminated had Berkshire used its OXY preferred shares to pay for the deal, as some had anticipated.
That means Occidental will probably continue to pay Berkshire more than $600 million in dividends each year until the preferred shares are scheduled to be redeemed in 2029.
Fortune, on the other hand, highlights the benefits to Occidental of reducing its debt load.
It quotes Wolfe Research analyst Doug Leggate calling the deal a “win-plus for Berkshire because it also helps the company that they own [roughly] 30% of. It’s completely self-serving, it’s logical, and—not in any nefarious way—definitely helpful.”
That’s the way Berkshire’s Greg Abel played it in the deal’s news release that, interestingly, never mentioned Buffett’s name.
“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.”
Berkshire takes formal step to prepare for Abel’s new job
Berkshire Hathaway’s board of directors has changed the company’s by-laws to separate the roles of chairman and CEO.
An SEC filing today (Friday) says the board voted to make the revisions on Tuesday, almost three months before current Vice Chairman of Non-Insurance Operations Greg Abel is scheduled to become CEO on January 1.
As Warren Buffett said in May when he announced he would step down from the CEO job, he will remain chairman of the board.
Buffett bust sold for charity
Warren Buffett is no longer raising millions for charity by auctioning off the opportunity to have lunch with him as he has in years past.
But a bronze bust of him sold this week for $26,201 in an eBay sale organized by Mohnish Pabrai, an investor who calls himself an “ardent disciple” of Buffett.
It is for the benefit of the Dakshana Foundation, which offers higher education entrance exam coaching to impoverished students in rural India as part of an effort to alleviate poverty.
BUFFETT AROUND THE INTERNET
Some links may require a subscription:
- CNBC Pro (subscription): Warren Buffett’s Japan bet that he discovered by reading a ‘little handbook’ is up as much as sixfold
- CNBC Make It: Jim Cramer disagrees with Warren Buffett on this classic piece of investing advice—here’s why
- Bloomberg Opinion (subscription): Warren Buffett Will Decide When It’s Time to Do a Rail Deal
HIGHLIGHTS FROM THE ARCHIVE
How to take a small business to the next level (2008)
Warren Buffett explains how consistency helped him and Charlie Munger gradually build Berkshire Hathaway into what it is today.
BERKSHIRE STOCK WATCH
Four weeks
Twelve months
BERKSHIRE’S TOP STOCK HOLDINGS – Oct. 3, 2025
Berkshire’s top holdings of disclosed publicly traded stocks in the U.S., Japan, and Hong Kong, by market value, based on today’s closing prices.
Holdings are as of June 30, 2025, as reported in Berkshire Hathaway’s 13F filing on August 14, 2025, except for:
- Itochu, which is as of March 17, 2025, and Mitsubishi, which is as of August 28, 2025. Tokyo Stock Exchange prices are converted to U.S. dollars from Japanese yen.
The full list of holdings and current market values is available from CNBC.com’s Berkshire Hathaway Portfolio Tracker.
QUESTIONS OR COMMENTS
Please send any questions or comments about the newsletter to me at alex.crippen@nbcuni.com. (Sorry, but we don’t forward questions or comments to Buffett himself.)
If you aren’t already subscribed to this newsletter, you can sign up here.
Also, Buffett’s annual letters to shareholders are highly recommended reading. There are collected here on Berkshire’s website.
— Alex Crippen, Editor, Warren Buffett Watch
International: Top News And Analysis
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