Berkshire’s Deal for OxyChem Looks Like a Winner for CEO

Berkshire Hathaway’s $9.7-billion cash purchase of Occidental Petroleum’s chemical business appears to be a win for CEO Greg Abel, who played a key role in the transaction before taking the helm.

OxyChem operates 23 manufacturing plants, almost entirely in the United States. (Photo: B&W Energy Services) 

The OxyChem deal, reached in October and completed in January, took place after Occidental sought to cut debt, Andrew Bary reported for Barron's.

A report by the Financial Times described Abel as the mastermind behind the transaction.

Berkshire paid what analysts consider a reasonable price for the business, based on what could have been weak earnings in 2025, with potential profit upside from a capital-spending plan by Occidental.

Occidental retained $1.7 billion in environmental liabilities.

The purchase price amounted to about eight times projected 2025 earnings before interest, taxes, depreciation and amortization (EBITDA).

U.S.-focused chemical companies are benefiting from favorable feedstock pricing—such as natural gas—amid international energy disruptions caused by the Middle East conflict.

Barron’s estimates that Berkshire may already have a gain of more than 30% in the value of OxyChem—over $3 billion—since the deal closed.

OxyChem operates 23 manufacturing plants, almost entirely in the United States, and is a leading producer of caustic potash, chlor-alkali, and polyvinyl chloride.

Occidental used the after-tax proceeds to reduce its debt to below $15 billion, cut interest expenses, and reallocate capital to high-return projects in its core oil and gas business.

Arun Jayaram, an analyst at JPMorgan, noted Occidental’s rationale, citing concerns over growing Chinese chemical capacity.

Lukasz Thieme, a financial planner and partner at Waypoint Financial, wrote on Substack that Berkshire will also benefit from a $1-billion upgrade to an OxyChem plant in Texas due to be completed this year.

The upgrade could add about $300 million to annual EBITDA from an estimated 2025 base of $1.2 billion.