After six years without a major transaction, billionaire investor Warren Buffett is back on the hunt and adding companies to his Berkshire Hathaway investment group.
Warren Buffett’s Berkshire Hathaway (BRK.A) – Get Berkshire Hathaway Inc. Class A Report agreed Monday to buy insurance group Alleghany Corp. (Y) – Get Alleghany Corporation Report for around $11.6 billion as the investment group adds to its 2022 acquisition run while quietly surpassing the $500,000 share price benchmark.
Berkshire will pay $848.02 per share, in cash, for Alleghany, a 25.3% premium to its Friday closing price at level that values the group at around $11.6 billion. The deal, which is expected to close in the fourth quarter, includes a 25-day “go shop” period that would allow Alleghany to consider alternate proposals, the companies said.
Jefferson Kirby, who controls a 2.5% stake in Alleghany and has served as chairman since 2010, will vote his approval of the deal, the companies said.
“Berkshire will be the perfect permanent home for Alleghany, a company that I have closely observed for 60 years,” Buffett said. “Throughout 85 years the Kirby family has created a business that has many similarities to Berkshire Hathaway. I am particularly delighted that I will once again work together with my long-time friend, (chief executive officer) Joe Brandon.”
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Alleghany shares were marked 25.2% higher in pre-market trading following news of the purchase to indicate an opening bell price of $847.00 each. Berkshire shares, meanwhile, were little-changed from their Friday closed at $512,991.00 each.
Buffet, who prior to this month hadn’t had a major acquisition in six years, hinted earlier this year that he may be tempted to put his $146.7 billion cash pile to work in finding more companies to buy after signaling a slowdown in share buybacks following record profits record operating profits of $27.46 billion and net income of just under $90 billion in 2021.
Since then, Berkshire has deepened its stake in oil major Occidental Petroleum (OXY) – Get Occidental Petroleum Corporation Report to around $7 billion while adding more than 8.8% to the group’s A-shares, pegging Berkshire Hathaway as the sixth-largest U.S. stock, just behind Tesla (TSLA) – Get Tesla Inc Report, with a market value of around $755 billion.