Berkshire Hathaway, the investment firm of Warren Buffett, has increased its stake in Occidental Petroleum, buying 12 million additional shares that have pushed its holding in the company to 18.7 percent.
The latest share acquisition cost close to $700 million, Reuters reported, citing a regulatory filing made by Berkshire Hathaway. The investment company has thus become the largest shareholder in the energy major.
The report noted that the recent series of share purchases in Oxy could suggest that Berkshire might eventually decide to take over the company. A week ago, Berkshire Hathaway bought another 9.9 million shares in Oxy.
Reuters reported earlier this month that in addition to its stock in the company, Berkshire Hathaway also has warrants for the purchase of another 83.9 million shares in Oxy for some $5 billion.
Buffett’s conglomerate started buying shares in Oxy earlier this year, and by early May, it already had 15.2 percent. As a holder of over 10% in a public company, Berkshire Hathaway now has to report new ownership shares within two business days.
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The move could be seen as Buffett preparing to lift Berkshire Hathaway’s stake to 20 percent, which would give the company a different accounting treatment for Occidental and let it reflect a proportional share of Occidental’s earnings in its own results, Barron’s reported in May.
Three years ago, Berkshire Hathaway funded Oxy’s takeover of Anadarko with $10 billion in the form of equity. It was as part of this deal that the investment firm received the stock purchase warrants that could see it acquire 20 percent or more in Occidental.
Occidental bought Anadarko for $55 billion in 2019, making it one of the biggest M&A deals in energy over the past few years. In that, it outbid Chevron, which had earlier announced a bid for the energy company.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com