Berkshire Hathaway, the holding company owned by renowned investor Warren Buffet, has agreed a deal to buy insurance company Alleghany Corp for $11.6bn, or $848.02 per share, in cash.
Buffet, known as the ‘Oracle of Omaha’, has gone on record a number of times in recent years stating that he wishes to make a large purchase, and just weeks ago was lamenting the lack of good investment opportunities. The purchase of Alleghany, who also own reinsurer Transatlantic Holdings Inc, represents Berkshire’s largest deal since 2016 when it bought aerospace equipment firm Precision Castparts for $37bn.
The Alleghany deal sees Berkshire expand its portfolio of insurers, which already features auto insurer Geico and reinsurer General Re. The acquisition will see Buffet reunite with Joe Brandon, the former CEO of General Re who now heads Alleghany and is described by Buffet as a “long-time friend”.
“Berkshire will be the perfect permanent home for Alleghany, a company that I have closely observed for 60 years,” Buffett said in a statement. “I am particularly delighted that I will once again work together with my long-time friend, Joe Brandon.”
Brandon said that the deal represented a “terrific transaction for Alleghany’s owners, businesses, customers, and employees,” adding that “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.”
Shares of Alleghany rose approximately 25% on the news, whilst Berkshire’s class A shares went up more than 2% and its class B also stock rose slightly.