The Wall Street Journal (WSJ) reported on September 30 (local time) that Berkshire Hathaway, led by the "Oracle of Omaha" Warren Buffett, is finalizing negotiations to acquire OxyChem, the petrochemical business unit of Occidental Petroleum, for $10 billion (approximately 14 trillion won).
According to sources, the deal could be completed within a few days.
If Berkshire signs the agreement to acquire OxyChem, it will be the company's largest acquisition since it purchased insurance group Alleghany for $11.6 billion in 2022. In the chemical sector, it would mark Berkshire's second major investment since acquiring specialty chemical manufacturer Lubrizol in 2011. Additionally, this could be Buffett's last "big deal" before he steps down as CEO at the end of this year.
Berkshire currently holds a massive cash reserve of around $350 billion. The Financial Times (FT), citing industry insiders, reported that Berkshire does not plan to pay for the acquisition using Occidental shares.
Berkshire is already the largest shareholder of Occidental, holding 26.9% of its outstanding shares. In 2019, Buffett supported Occidental's acquisition of Anadarko Petroleum by purchasing $10 billion worth of preferred shares, enabling Occidental to complete the Anadarko deal.
However, Occidental has faced challenges since then. The company has struggled with a heavy debt burden resulting from the acquisition, and more recently, falling oil prices have further intensified its difficulties.
Occidental has been seeking to improve its financial structure by selling non-core assets. Through this sale, the company will be able to reduce its debt burden and focus its resources on core businesses.
Buffett has previously stated that he prefers acquiring companies, but finding suitable targets is not easy. In his annual letter to shareholders earlier this year, he wrote, "Berkshire will never prefer holding cash equivalents over owning a good business."
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