Warren Buffett’s Berkshire Hathaway to buy Alleghany for $11.6bn all-cash

Warren Buffett’s  Berkshire Hathaway has agreed a $11.6bn all-cash deal to acquire  Alleghany Corporation, which owns global reinsurer TransRe, wholesale specialty insurers RSUI, and CapSpecialty, an underwriter of specialty casualty and surety insurance.

The two companies jointly announced that they have entered into a definitive agreement under which Berkshire Hathaway will acquire all outstanding Alleghany shares for $848.02 per share in cash.

The transaction is unanimously approved by both boards of directors, and is expected to close in the fourth quarter of 2022, subject to customary closing conditions, including approval by Alleghany stockholders and receipt of regulatory approvals.

Upon closing, Alleghany will continue to operate as an independent subsidiary of Berkshire Hathaway.

Jefferson Kirby (pictured), chair of Alleghany's board of directors, who controls 2.5% of Alleghany common shares, intends to vote his shares for the transaction.

Warren Buffett highlighted strong strategic fit between Berkshire Hathaway and Alleghany, stating that “ 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 chairman and chief executive officer of Berkshire Hathaway.

Joseph Brandon, Alleghany’s president and chief executive officer, described the $11.6bn transaction as “terrific” for its owners, businesses, customers, and employees.

“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,” Brandon said.

Kirby noted: “ Berkshire Hathaway’s support, resources, and expertise will provide added benefits and opportunities for Alleghany and its operating businesses for many years to come.”

“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. 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,” he said.

Goldman Sachs is serving as financial advisor and Willkie Farr & Gallagher is serving as legal advisor to Alleghany. Munger, Tolles & Olson is serving as legal advisor to Berkshire Hathaway.

Under the terms of the definitive merger agreement, Alleghany may actively solicit and consider alternative acquisition proposals during a 25-day “go-shop” period.

Alleghany has the right to terminate the merger agreement to accept a superior proposal during the go-shop period, subject to the terms and conditions of the merger agreement.

There can be no assurances that the “go-shop” process will result in a superior proposal.

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