Warren Buffett is putting his money where his mouth is. Berkshire Hathaway announced Monday morning that it has agreed to buy Alleghany Insurance. He would buy the company for $11.6 billion in cash, or $848.02 per share. The acquisition “represents a multiple of 1.26 times Alleghany’s book value at December 31, 2021,” according to the conglomerate. As well as a 16 percent premium to Alleghany’s 30-day average stock price. The acquisition is scheduled to finalize this year in the fourth quarter.
In the premarket, Alleghany stock jumped more than 15%. Alleghany is active in a variety of insurance sectors through its subsidiaries, including wholesale specialty, property and casualty, and reinsurance.
Buffett, Berkshire’s chairman, and CEO said in a statement that “Berkshire will be the appropriate permanent home for Alleghany, a company that I have closely observed for 60 years.”
Warren and his right-hand man, vice chairman Charlie Munger, have indicated impatience in their search for a large acquisition. So the deal may surprise some Berkshire shareholders. Buffett and Munger discovered little that “excites” them in terms of significant acquisitions in their 2022 annual letter to shareholders.
To be fair, $11.6 billion is a little sum when compared to Berkshire’s vast cash hoard. It was estimated to be worth $146.72 billion at the end of 2021.
Berkshire’s Class A shares touched a record high last week, closing above $500,000 for the first time, prompting Monday’s trade.
More About Berkshire Hathaway
Berkshire Hathaway Inc., headquartered in Omaha, Nebraska, is an American global conglomerate holding company. Warren Buffett, the company’s chairman and chief executive, and Charlie Munger, the company’s vice chairman, are noted for their control and leadership. From 2016 until early 2020, the business purchased huge stakes in major US aircraft carriers, including United Airlines, Delta Air Lines, Southwest Airlines, and American Airlines, but sold all of its airline holdings following the COVID-19 pandemic. With Class A shares costing roughly $450,000 each, the corporation is known for having the most expensive share price in history.