Warren Buffett’s most devoted admirers are enthusiastically marking what could be a defining moment near the close of his storied tenure as Berkshire Hathaway’s chief executive officer. In his last quarter leading the conglomerate, they view his newest multibillion-dollar acquisition as a fitting tribute to his enduring investment philosophy—and several observers have suggested to Business Insider that Buffett may still have a few surprises left before his final bow.
In a statement released on Thursday, Berkshire Hathaway confirmed its intention to purchase Occidental Petroleum’s chemical division, OxyChem, for an impressive $9.7 billion in cash. This transaction represents Berkshire’s largest acquisition since its $12 billion takeover of the insurer Alleghany in 2022, underscoring the firm’s capacity to deploy capital on an enormous scale. Financial markets reacted swiftly: Occidental’s shares fell roughly 7% upon the announcement, a movement that David Kass—professor of finance at the University of Maryland and a longtime commentator on Buffett’s strategies—interpreted as a clear signal that Berkshire secured exceptionally advantageous purchase conditions. Given both Buffett’s reputation for disciplined negotiation and the historical relationship between Berkshire and Occidental, such favorable terms come as no surprise.
The cooperation between the two companies dates back several years. In 2019, Berkshire invested $10 billion to support Occidental’s $55 billion acquisition of Anadarko Petroleum, receiving preferred stock and warrants in return. By 2022, Berkshire began acquiring Occidental’s common shares directly, progressively building a formidable ownership stake that reached approximately 28 percent by mid-2024. While both corporations declined to comment immediately, the broad structure and rationale behind the transaction speak powerfully to the mutual trust and long-term alignment between these business giants.
Brett Gardner, financial analyst and author of *Buffett’s Early Investments*, characterized the purchase of OxyChem as a rare “win-win” scenario. He noted that Berkshire not only obtained the asset at an attractive valuation but also provided Occidental with the breathing room it needed to strengthen its balance sheet. In recent years, Occidental has carried substantial debt—largely due to its ambitious takeover of Anadarko and its 2023 purchase of competitor Crown Rock. According to Occidental’s own statements, the sale of OxyChem will allow it to reduce its debt load by $6.5 billion, moving it well within the company’s target of keeping total liabilities below $15 billion. At the same time, Berkshire Hathaway’s financial position could hardly be stronger: by the end of June, it held an extraordinary $344 billion in liquid cash, giving it vast flexibility to pursue opportunities of this magnitude.
Alex Morris—author of *Buffett and Munger Unscripted* and founder of the investment research service TSOH—provided further valuation insight. He estimated that Berkshire was effectively paying about eight times OxyChem’s trailing 10-year average pre-tax earnings of $1.2 billion, a multiple he described as justifiable and attractive, assuming that long-term earnings patterns persist. From Occidental’s perspective, CEO Vicki Hollub’s decision to divest the chemical unit appears motivated by strategic financial priorities: accelerated debt repayment and the desire to resume share repurchases. As Morris succinctly observed, investors often favor a “cleaner story”—one in which the company’s capital structure and profitability profile appear streamlined and consistent.
Paul Lountzis, president of Lountzis Asset Management, echoed this sentiment, calling Berkshire’s purchase “solid” precisely because it targets an undervalued business likely positioned near the bottom of its long-term earnings cycle. Depressed oil prices—pressuring margins across the broader chemicals sector—have caused Occidental to forecast OxyChem’s profits at approximately $850 million for the current year, marking a five-year low. Against that backdrop, Berkshire’s timing appears characteristically prudent: investing when others hesitate has long been a hallmark of Buffett’s disciplined contrarianism.
Lawrence Cunningham—renowned author of several Berkshire studies and director of the University of Delaware’s Weinberg Center—emphasized that the deal exemplifies mutual, forward-looking strategic interests rather than mere opportunism. Because Berkshire holds nearly one-third of Occidental’s shares, its fortunes are bound to Occidental’s success. As Cunningham explained, the transaction provides a healthy, cash-generating enterprise for Berkshire while simultaneously empowering Occidental to pay down debt and enhance its long-term operational stability. In this sense, the partnership reinforces both companies’ resilience and reflects Buffett’s trademark focus on enduring value creation.
The OxyChem acquisition also raises the question of whether this marks Buffett’s final major act as CEO. With Greg Abel—Berkshire’s non-insurance operating chief—scheduled to take the helm by year’s end, an era that began in 1970 draws to a natural close. Buffett, however, will retain the role of chairman, preserving his voice in strategic deliberations. Kass suggested that this deal serves as a “fitting final gesture,” recalling how Buffett first arranged Occidental’s financing in 2019 and subsequently built it into one of Berkshire’s most significant holdings. The historical resonance runs deep: Buffett’s very first stock purchase, made at the age of 11, was Cities Service Preferred—part of an oil company that Occidental would later absorb in 1982.
Still, Gardner pointed out that history shows Buffett rarely exits the stage quietly. With several months left in his tenure, he said, “there may still be a surprise or two.” He predicted that Greg Abel, as the incoming CEO, is likely to collaborate closely with Buffett in identifying and executing future opportunities, particularly during volatile market conditions. As Gardner put it, “Abel won’t let the most accomplished capital allocator of all time simply sit idle when markets become unpredictable.” While Abel will ultimately have the final say over acquisitions, Buffett’s wisdom and instinct remain irreplaceable—assets that continue to shape Berkshire’s decisions even at the age of ninety-five.
Cunningham added that the OxyChem purchase echoes several qualities emblematic of a Buffett-style deal: its clarity of purpose, durability of assets, and mutual benefit for all stakeholders. Yet, he observed, the structure of the transaction—a corporate carve-out rather than a full-company acquisition—has few parallels in Berkshire’s long history. For that reason, Cunningham called it an ideal “bridge deal”: classic in essence but contemporary in execution, symbolizing a graceful transition from Buffett, the consummate investor, to Abel, the exemplary operator.
Looking forward, Lountzis believes this may stand as the last major acquisition under Buffett’s direct leadership—and possibly Berkshire’s final large move for some time. In an era when asset valuations are universally elevated, identifying investments substantial enough to influence Berkshire’s vast balance sheet has become exceedingly difficult. In his view, abundant speculative capital has driven prices beyond what Buffett would consider rational, so patience and selectivity remain virtues worth maintaining.
John Longo—a finance professor, wealth manager, and author of *Buffett’s Tips: A Guide to Financial Literacy and Life*—offered one potential scenario that could still entice the legendary investor. Longo speculated that Buffett may be carefully analyzing the proposed merger between Union Pacific and Norfolk Southern; if he concludes that regulators might approve, Buffet could explore merging Berkshire’s own railroad, BNSF Railway, with another national carrier. Such a colossal undertaking would not merely conclude his career with significance—it would punctuate it, as Longo phrased, with “an exclamation point.”
Sourse: https://www.businessinsider.com/warren-buffett-berkshire-hathway-oxychem-deals-acquisitions-investing-oxy-retirement-2025-10
