BY Richard Summerfield
Berkshire Hathaway has agreed to acquire insurance firm Alleghany Inc in a deal worth $11.6bn. The acquisition, upon completion, would be one of the five largest deals in Berkshire’s history and will put some of the firm’s $146.7bn of cash and equivalents to work after a nearly six year wait for a large deal.
The all-cash acquisition of Alleghany will expand Berkshire’s already considerable insurance holdings, including brands like Geico auto insurance. Alleghany’s core businesses are property and casualty reinsurance and insurance.
Under the terms of the deal, Berkshire will pay $848.02 in cash for each outstanding share of Alleghany. The price represents a 25 percent premium over Friday’s closing price, the last day of trading before the deal was announced.
Upon completion, which is expected in the fourth quarter of 2022, pending regulatory and Alleghany shareholder approvals, Alleghany will operate as an independent unit of Berkshire. The company has 25 days to actively solicit and consider alternative acquisition proposals under a ‘go-shop’ provision.
“Berkshire will be the perfect permanent home for Alleghany, a company that I have closely observed for 60 years,” said Warren Buffett, chairman and chief executive of Berkshire Hathaway. “Throughout 85 years the Kirby family has created a business that has many similarities to Berkshire Hathaway. I am particularly delighted that I will once again work together with my long-time friend, Joe Brandon.”
“My family and I have been significant shareholders of Alleghany for over 85 years and are proud that our ownership will culminate through this compelling transaction with Berkshire Hathaway,” said Jefferson W. Kirby, chair of the Alleghany board of directors. “Not only does this deal provide substantial and certain value to stockholders, but it provides a rare opportunity to join forces with a like-minded and highly respected investor and business leader. Berkshire Hathaway’s support, resources, and expertise will provide added benefits and opportunities for Alleghany and its operating businesses for many years to come.”
“This is a terrific transaction for Alleghany’s owners, businesses, customers, and employees,” said Joseph P. Brandon, president and chief executive of Alleghany. “The value of this transaction reflects the quality of our franchises and is the product of the hard work, persistence, and determination of the Alleghany team over decades. As part of Berkshire Hathaway, which epitomizes our long-term management philosophy, each of Alleghany’s businesses will be exceptionally well positioned to serve its clients and achieve its full potential.”
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