The investment is subject to Occidental entering into and completing the acquisition of Anadarko Petroleum.
Under the arrangement, Berkshire Hathaway will receive 100,000 preferred shares with a liquidation value of $100,000 per share and a warrant to buy up to 80 million shares of Occidental at an exercise price of $62.50 per share.
Last week, Occidental made a proposal to acquire Anadarko with a cash and stock offer valuing $57bn. Occidental made the hostile bid for its domestic rival just weeks after Chevron signed a definitive agreement to acquire Anadarko.
Occidental’s $76 per share offer represents a premium of around 20% compared to Chevron’s offer. After consulting with financial and legal advisors, Anadarko also confirmed Occidental’s offer as a ‘superior proposal’. Currently, both companies are negotiating the deal.
Occidental president and CEO Vicki Hollub said: “We have long believed that Occidental is uniquely positioned to generate compelling value from Anadarko’s highly complementary asset portfolio.
“We are thrilled to have Berkshire Hathaway’s financial support of this exciting opportunity.
“We look forward to engaging with Anadarko’s Board of Directors to deliver this superior transaction to our respective shareholders.”
Besides boosting its chances to seize the Anadarko deal, the Berkshire Hathaway investment may also help the company to reduce its debt taken to fund the acquisition.