Occidental Petroleum Oxychem sells to Berkshire Hathaway for $ 9.7 billion

You will sell instinct oil Warren BuffettThe company said on Thursday, indicating that Berkshire Hathaway for $ 9.7 billion, which represents the largest withdrawal of debt to cut debts after years of costly acquisitions.

However, US oil and gas products shares decreased more than 6 % in morning trading. Roth MKM analysts said in note that the sale of Oxychem could affect the growth of free cash flow in the coming years, as the unit was expected to contribute significantly to expansion. Paul Cheng, a ScotiaBank analyst, pointed out that the price of the transaction seemed low because it had previously estimated the value of the department to $ 12 billion.

Warren Buffett to step down as CEO of Hathaway by the end of the year

Oxychem, which produces chemicals used to treat swimming pools and vinyl products used for water and medical supplies pipes, achieved a combined revenue of $ 2.42 billion in the first two quarter of this year.

If the deal is closed, it will be the largest purchase of Berkshire since the purchase of ALLGHANY Corporation, which is valued at $ 11.6 billion in 2022, and expanding its chemical portfolio beyond Lubrizole.
Berkshire is the largest shareholder in Oxidental and began obtaining a stake in the company in February 2022, soon when Russia invaded Ukraine.

Highlighting the close ties between the two. At a 2019 meeting with Buffett, the CEO of Oxidental Vicky Holoub received an investment of $ 10 billion that was allowed to make an offer for the Anadarko oil product, which surpasses Chevron to secure some of the richest. Shale oil fields In Texas.
But the purchase of $ 55 billion from Anadarko left Occidental with debt. The burden was exacerbated after the company closed its acquisition of $ 12 billion in oil products in the United States of America last year.

Buffett says Trump’s tariff, tells us that we should not use trade as a weapon. “

To reduce the huge debt burden, which amounted to $ 23.34 billion by the end of June, Occidental has been steadily stripped of assets in recent years.

The company revealed at $ 950 million in August Additional abstraction Since the beginning of the second quarter, of which 370 million dollars have already been closed, $ 3 billion in debt was paid a year.
Oxidental said on Thursday that it would use $ 6.5 billion of revenue to reduce debt, which led to the total major debt to less than the target of $ 15 billion after the crown deal.

The last deal, which is expected to be closed in the fourth quarter, also indicates that Occidental re -focuses on its oil and gas, which made up 75 % of its total profits last year.

Click here to get the Fox News app

Hollub CEO said that the sale of Oxychem will allow Occidental “to cancel the insurance of 20 years of low -cost resource runway” in oil and gas.