Warren Buffett Berkshire Hathaway announced Thursday that he has concluded an agreement to buy Western oil Petrochemical unit, oxychem, for $ 9.7 billion in cash.
The agreement has marked the largest in Berkshire since 2022, when he paid $ 11.6 billion for the Alleghany insurer. He also arrives at a time when the conglomerate is on 344 billion dollars in cash, near a record for the company.
Western shares fell by more than 7% on Thursday after the announcement.
Berkshire is already a major investor in Western, holding a 28.2% participation at the end of June. Buffett – Who is 95 years old and who withdrew as CEOs at the end of the year – said he would not take total control of the oil company based in Houston.
Oxychem manufactures water treatment, health care and other commercial chemicals. Western said that it would use $ 6.5 billion in the product to repay the debt.
The CEO of Western, Vicki Hollub, said that the reduction in debt resulting from the agreement will allow his business to restart the buyout.
“The problem was to reduce our debt faster, so it solves the only unanswered problem which, in my opinion, will now unlock our actions and allow shareholders to feel more comfortable, hopefully, to add to their positions and others,” said Hollub on Thursday on the “Squawk box” of CNBC. “So now, we will be able to start our share purchase program again. … This is the last step we needed in our major transformation that we started 10 years ago.”
The last time Berkshire concluded an agreement in the chemical space was in 2011, buying Lubrizol for a similar figure of $ 10 billion.
“We are impatient to welcome Oxychem as an operational subsidiary within Berkshire,” said Greg Abel, vice-president of non-insurance operations in Berkshire, in a press release.
Abel, who will succeed Buffett as CEO of Berkshire in 2026, added that Hollub shows his “commitment to the long -term financial stability of Western, as shown by their product use plan to strengthen the business report”.
The two companies expect the agreement to end in the fourth quarter. The Wall Street Journal reported the transaction earlier this week.
Buffett was involved for the first time in Western in 2019 when he helped buy by Anadarko Petrolem by Bankroll with a commitment of $ 10 billion. He received preferred actions and mandates to buy ordinary actions in return.
Hollub said that Occidental increases his cash position, he will begin to buy Berkshire’s privileged actions in 2029. Western is currently a dividend of 8% on Berkshire’s favorites.
