OMAHA, Neb. — Berkshire Hathaway has announced its acquisition of Occidental Petroleum’s chemical division, OxyChem, for $9.7 billion, marking a significant move for the conglomerate amid a leadership transition. This deal could represent one of the final major ventures for Warren Buffett, the legendary investor preparing to hand over the CEO role to Vice Chair Greg Abel in January.

While Buffett’s name was absent from the official communications about the acquisition, industry insiders speculate that he played a crucial role in the deal, particularly given his longstanding rapport with Occidental CEO Vicki Hollub. Buffett has openly supported her initiatives since aiding her in a significant acquisition in 2019. Even after stepping back from daily operations, he will retain his title as chairman and continue to guide Berkshire’s investment strategies, which include a staggering cash reserve of over $344 billion.

Buffett has faced challenges finding major acquisitions at favorable prices since completing the purchase of Alleghany Insurance for $11.6 billion last year, partly due to increased competition from hedge funds. The recent transaction, while substantial, utilizes less than 3% of Berkshire’s cash, leading some investors to express skepticism, as reflected in the stock’s modest decline following the announcement.

OxyChem specializes in manufacturing chlorine for municipal water treatment, vinyl chloride for plastics, and calcium chloride for de-icing roads, complementing Berkshire’s existing holdings, including Lubrizol, acquired in 2011. Despite Berkshire’s reputation for acquiring businesses, the company generally allows its subsidiaries to operate independently.

Jim Shanahan, an analyst at Edward Jones, noted that Abel’s leadership will be closely scrutinized by investors eager to see how his management style diverges from Buffett’s. Abel is known for being more hands-on, which may lead to a shift in how Berkshire’s various companies collaborate or consolidate their operations.

Under Occidental’s purview, OxyChem generated $213 million in pretax earnings in the second quarter, though this represented a decline from nearly $300 million the previous year. Occidental plans to utilize $6.5 billion from the Berkshire deal to reduce its debt, which has been a priority since its December acquisition of CrownRock. The company has already sold off around $4 billion in assets to meet its debt obligations.

Berkshire’s stake in Occidental is considerable, owning over 28% of the company’s shares and holding warrants for additional shares at a favorable price. Buffett has indicated a commitment to maintaining Berkshire’s involvement with Occidental, routinely reinforcing its financial ties while also making it clear that a full buyout of the oil company is not on his agenda.

The expected completion of the OxyChem acquisition is set for the fourth quarter of this year. Berkshire Hathaway continues to diversify its portfolio, which includes a range of companies from Geico to Coca-Cola, affirming its position as a leading force in the investment landscape.