His last big deal as Berkshire CEO before Abel takes over?

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The deal builds on an already shut relationship between the businesses:  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 greater than $8 billion in most well-liked shares held by Berkshire after what was, in impact, a loan to help OXY buy Anadarko Petroleum in 2019.

As a part of that deal, Berkshire additionally now holds warrants to purchase almost 84 million further OXY widespread shares for just below $60 per share, which is increased than their present value just below $45.

Despite these ties, Buffett told shareholders two years ago Berkshire won’t attempt to purchase Occidental in its entirety.

In a live interview on CNBC’s “Squawk Box” the morning of the announcement, CEO Vicki Hollub stated it’s going to use $6.5 billion of the OxyChem buy value to scale back its debt, bringing it under the $15 billion goal 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 factor that we wanted to do was enhance our steadiness sheet. So that is that last big step that we’d like and now I feel we’re off and working to worth creation that is going to return at a a lot quicker tempo 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 evaluation: “Score one for Warren Buffett on the expense of Occidental Petroleum CEO Vicki Hollub.”

It says the purchase price “could possibly be a discount as a result of earnings within the sector are depressed this 12 months” 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 as a result of it additionally helps the corporate that they personal [roughly] 30% of. It’s fully self-serving, it is logical, and—not in any nefarious manner—positively useful.”

That’s the way in which Berkshire’s Greg Abel performed it in the deal’s news release that, curiously, by no means talked about Buffett’s identify.

“We commend Vicki and the Occidental crew for his or her dedication to Occidental’s long-term monetary stability, as demonstrated by their plan to make use of proceeds to strengthen the corporate’s steadiness sheet.”

Warren Buffett explains how consistency helped him and Charlie Munger steadily construct Berkshire Hathaway into what it’s at this time.

Holdings are as of June 30, 2025, as reported in Berkshire Hathaway’s 13F filing on August 14, 2025, except for:

The full list of holdings and current market values is available from CNBC.com’s Berkshire Hathaway Portfolio Tracker.

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Also, Buffett’s annual letters to shareholders are extremely beneficial studying. There are collected here on Berkshire’s website.

— Alex Crippen, Editor, Warren Buffett Watch