Berkshire’s $11.6B Deal For Alleghany Expands Insurance Wing

Warren Buffett’s Berkshire Hathaway is buying the insurance company Alleghany in a deal valued at approximately $11.6 billion.

The acquisition will expand Berkshire’s already considerable insurance holdings including brands like Geico auto insurance.

“Berkshire will be the perfect permanent home for Alleghany, a company that I have closely observed for 60 years,” Buffett said in a prepared statement Monday. “Throughout 85 years the Kirby family has created a business that has many similarities to Berkshire Hathaway.”

Berkshire will pay $848.02 in cash for each outstanding share of Alleghany Corp., the company said Monday.

Berkshire will pay $848.02 per Alleghany Corp. share in cash.

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

Alleghany, based in New York City, will operate as an independent subsidiary of Berkshire Hathaway after the transaction’s closing. It has 25 days to actively solicit and consider alternative acquisition proposals under a “go-shop” provision.

The acquisition’s announcement comes after Buffett said last month in his annual letter to company investors that he was having difficulty finding worthwhile acquisitions with the valuations on companies soaring.

Still, Berkshire quietly built up a 14.6 percent stake in Occidental Petroleum including, according to filings with the Securities and Exchange Commission, another $1 billion worth of shares last week.

Oil prices have surged this year, as has the stock of energy companies.

The boards of both Allegheny and Berkshire have approved the deal and it’s expected to close in the fourth quarter. It still needs approval from Alleghany shareholders.