Berkshire Hathaway will trade about 19 million of its 27.2 million Phillips 66 shares, though the exact number of PSX shares will be determined by the price of the Houston-based company’s stock when the deal closes.
The business was sold solely because Warren Buffett and Berkshire Hathaway made an offer.
“I have long been impressed by the strength of the Phillips 66 business portfolio,” Buffett said in a statement. “The flow improver business is a high-quality business with consistently strong financial performance.”
According to a release, Berkshire’s Ohio-based chemical maker Lubrizol will oversee the unit.
Warren Buffett and Berkshire Hathaway bought Lubrizol for about $9 billion in 2011.
The news of the purchase did help PSX stock see a 1% pre-market bump.
Reuters reported that the purchase was another move by Warren Buffett and Berkshire Hathaway along a similar buying trend (via Reuters).
Berkshire favors larger companies with consistent earnings power and easy-to-understand businesses.
In June, it paid $12.3 billion for half of ketchup maker H.J. Heinz Co, and in May said it paid $2.05 billion for the 20 percent it did not already own of Israeli toolmaker Iscar. Earlier this month, Berkshire’s MidAmerican Energy unit paid $5.6 billion for the Nevada utility NV Energy Inc.
The deal is expected to close in the first half of 2014.
PSX stock is up 40% year to date.