Warren Buffett’s (BRK.B) Final Deal to Buy Occidental Chemicals Looks Like a Genius Move

Warren Buffett has done it again.

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The legendary investor’s final deal as CEO of Berkshire Hathaway (BRK.B) was to buy Occidental Petroleum’s OXY +3.95% ▲ chemical business for $9.7 billion in cash. While some analysts initially questioned the deal, it now looks like a stroke of genius with oil prices surging.

Chemical stocks like Dow DOW +0.94% ▲ , Westlake WLK +1.23% ▲ and Lyondell Basell Industries LYB +2.53% ▲ are up 40% or more this year because U.S.-oriented chemicals companies are benefiting from international energy dislocations caused by the ongoing wars in the Middle East.

The deal for Occidental Chemicals was reached in October of last year and closed in early January. Berkshire paid a reasonable price for the business. The purchase price amounted to about eight times 2025 earnings. To top it off, Buffett convinced Occidental Petroleum to retain $1.7 billion of environmental liabilities after the deal concluded.

Occidental Petroleum’s Debt

Analysts say Buffett was able to get a great deal for the chemical unit because Occidental Petroleum was eager to raise money and pay down its $23 billion of debt. Conservative estimates say that Berkshire Hathaway has a 30% gain in the value of Occidental Chemicals, or more than $3 billion, since the deal closed a few months ago.

Occidental Chemicals operates 23 manufacturing plants in the U.S. and is a leading producer of caustic potash, chlor-alkali and polyvinyl chloride. Buffett and his successor as CEO Greg Abel have been criticized for not putting more of Berkshire’s $373.3 billion of cash to work through acquisitions. However, the two men continue to say that they’ll spend the cash when fair and profitable deals arise.

Is BRK.B Stock a Buy?

Only a couple of analysts currently offer a rating and price target on Berkshire Hathaway’s more affordable Class B stock. So instead, we’ll look at the shares’ one-year performance. As one can see in the chart below, shares of BRK.B have declined 0.36% over the past 12 months.

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