Warren Buffett Watch: His last big deal as Berkshire CEO before Abel takes over?

The deal builds on an already close relationship between the companies: Berkshire isOccidental’s largest shareholderwith astake 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 agoBerkshire will not try to acquire Occidental in its entirety.

In alive 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 itbought Permian Basin producer CrownRockin 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’sis bluntin 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 areexpected 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 Occidentalof 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 inthe deal’s news releasethat, 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’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 inBerkshire Hathaway’s 13F filingon August 14, 2025, except for:

• Itochu, which is as ofMarch 17, 2025,andMitsubishi, which is as ofAugust 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’sBerkshire Hathaway Portfolio Tracker.

Please send any questions or comments about the newsletter to me [email protected]. (Sorry, but we don’t forward questions or comments to Buffett himself.)

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Also, Buffett’s annual letters to shareholders are highly recommended reading. There are collectedhere on Berkshire’s website.

— Alex Crippen, Editor, Warren Buffett Watch