Berkshire Hathaway Acquires Alleghany for $11.6 Billion

Issue 115

Berkshire Hathaway agreed to buy insurer Alleghany Corp. for $11.6 billion as the company is now looking to expand its capabilities throughout the insurance market.

Berkshire has stated that the company will pay $848.02 per share of Alleghany which is over 20% higher than the company’s closing price on Friday.

The Berkshire conglomerate which owns large insurance companies like Geico is expected to finalize the deal by the end of this year. Before this acquisition, Berkshire did not make any large acquisitions throughout the year of 2021 and because of this, the company was able to build up a massive stockpile of cash ending the year with $146.7 billion.

The deal is not set in stone as part of the agreement included a 25-day “go shop” period in which Alleghany can seek a better deal elsewhere. This will unlikely amount to anything as the acquisition by Berkshire will likely follow through.Once the Acquisition is complete Alleghany will still operate as an independent entity, however, it will be able to receive support from Berkshire.

Source: Bloomberg