By Sam Boughedda
Investing.com -- Warren Buffett's Berkshire Hathaway (NYSE:BRKb) is to acquire Alleghany Corporation (NYSE:Y) in a deal worth approximately $11.6 billion.
Berkshire will pay $848.02 per share in cash for the owner of reinsurer TransRe. The price represents a 29% premium to Alleghany’s average stock price over the last 30 days and a 16% premium to Alleghany’s 52-week high closing price.
The transaction is expected to close in the fourth quarter, with Alleghany continuing to operate as an independent subsidiary of Berkshire Hathaway (NYSE:BRKa) after the completion.
"Berkshire will be the perfect permanent home for Alleghany, a company that I have closely observed for 60 years. 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," said Buffett, Berkshire Hathaway’s Chairman and CEO.
The acquisition news resulted in Alleghany shares jumping over 25% at the open.
Alleghany has a 25-day "go shop" period where it may actively solicit and consider other acquisition proposals. However, Keefe, Bruyette & Woods analyst Meyer Shields said in a research note that the company's relative complexity makes other bids unlikely.