Merger activity decreased last week with three new deals announced and two deals completed.
Alleghany Corporation (Y)
Incorporated in 1929 and based in New York, Alleghany Corporation was originally created as a holding company for railroad interests by railroad entrepreneurs Oris and Mantis Van Sweringen. Alleghany operates in three segments: reinsurance, insurance, and Alleghany Capital, providing property and casualty reinsurance and insurance products in the United States and internationally.
Berkshire Hathaway (BRK.A, BRK.B) announced last week that it will acquire all outstanding Alleghany shares for $848.02 per share in cash, for a total equity value of approximately $11.6 billion, representing a premium of 29% to Alleghany’s average stock price over the last 30 days. The transaction aligns well with Berkshire’s interests in both insurance and reinsurance.
According to an article from S&P Global, “Another element that makes the $11.6 billion deal attractive to Berkshire is that Alleghany has a brokered reinsurance unit, whereas The Berkshire Hathaway Reinsurance Group, the company’s reinsurance arm, sells directly to clients. A quota share with Alleghany’s reinsurance company has given Berkshire good insight into the business and increased its broker market distribution, UBS analyst Brian Meredith said in a note.”