Warren Buffett’s holding company Berkshire Hathaway (BRK.B) is buying Alleghany Insurance Company (Y) for $11.6 billion, or $848.02 per share, in cash.
Berkshire Hathaway said the deal “represents a multiple of 1.26 times Alleghany’s book value as of December 31, 2021,” as well as a 16% premium to Alleghany’s average share price over the past few years. last 30 days. The transaction is expected to close in the fourth quarter of this year.
Shares of Alleghany rose more than 15% in premarket trading on news of its acquisition.
“Berkshire will be the perfect permanent home for Alleghany, a company I have watched closely for 60 years,” Berkshire Chairman and Chief Executive Officer (CEO) Buffett said in a written statement.
The deal may surprise some Berkshire Hathaway shareholders as Buffett and his right-hand man, Vice Chairman Charlie Munger, have expressed frustration in their pursuit of a big acquisition. In his 2022 annual letter to shareholders, Buffett said he and Munger found little to excite them in terms of major acquisitions in today’s market.
Additionally, US$11.6 billion is a relatively small number compared to Berkshire Hathaway’s huge cash pile of US$146.72 billion at the end of 2021.
Berkshire Hathaway already owns several insurance companies, including Geico and General Re.