On Monday, Berkshire Hathaway announced it had agreed to purchase insurance company Alleghany for $11.6 billion in cash. The company said the deal, expected to close in the fourth quarter of this year, represents “a multiple of 1.26 times Alleghany’s book value at December 31, 2021” in addition to a 16% premium to Alleghany’s average stock price across the past 30 days.
In a statement, Berkshire Hathaway CEO Warren Buffett said, “Berkshire will be the perfect permanent home for Alleghany, a company that I have closely observed for 60 years.”
Meanwhile, Alleghany CEO Joseph Brandon called the deal a “terrific transaction for Alleghany’s owners, businesses, customers, and employees.” Brandon also noted 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.”
Nonetheless, Berkshire Hathaway’s $11.6 billion deal with Alleghany will come as a surprise to some Berkshire shareholders. Previously, Buffett and vice chairman Charlie Munger expressed their lack of interest in their search for a large acquisition. In a 2022 annual letter to shareholders, Buffett wrote that he had come across little that excited him.
