Core Insights - Berkshire Hathaway is acquiring Occidental Petroleum's chemical division, OxyChem, for $9.7 billion, marking a significant move as Warren Buffett prepares to transition leadership to Vice Chair Greg Abel in January [2][3]. Acquisition Details - The acquisition of OxyChem, which produces chemicals like chlorine and vinyl chloride, is seen as a strategic fit alongside Berkshire's existing portfolio, particularly with Lubrizol, acquired in 2011 for $9 billion [5][6]. - OxyChem generated $213 million in pretax earnings for Occidental in the second quarter, a decrease from nearly $300 million the previous year [7]. Financial Context - Occidental Petroleum is utilizing proceeds from the sale to reduce its debt, aiming to lower principal debt below $15 billion, following a strategy that includes selling off approximately $4 billion in assets since the CrownRock acquisition [8][7]. - Berkshire Hathaway holds over 28% of Occidental's stock and has significant preferred shares, indicating a strong financial relationship between the two companies [9][10]. Future Outlook - The OxyChem deal is expected to close in the fourth quarter of this year, further solidifying Berkshire's position in the chemical sector [11].

Group 1: Acquisition Details - Berkshire Hathaway is acquiring Occidental Petroleum's chemical division, OxyChem, for $9.7 billion, marking a significant transaction as Warren Buffett prepares to transition leadership to Vice Chair Greg Abel [1][5] - OxyChem produces various chemicals, including chlorine for water treatment and vinyl chloride for plastics, and generated $213 million in pretax earnings for Occidental in the second quarter, down from nearly $300 million the previous year [5][10] - The deal is expected to close in the fourth quarter of this year [12] Group 2: Financial Context - Berkshire Hathaway's cash reserves exceed $344 billion, having grown due to Buffett's difficulty in finding major acquisitions at attractive prices since the $11.6 billion acquisition of Alleghany Insurance in 2022 [2][4] - Occidental has been selling off assets, including approximately $4 billion worth, to reduce its debt, which stands at $7.5 billion, and plans to use $6.5 billion from the Berkshire deal to lower this debt [6][8] Group 3: Berkshire's Investment Strategy - Berkshire Hathaway holds over 28% of Occidental's stock and has warrants to purchase additional shares, alongside $8.5 billion in preferred shares acquired in 2019 [7][11] - Buffett has indicated a commitment to maintaining Berkshire's stake in Occidental, although he has no plans to acquire the entire company [10]