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Warren Buffett’s Berkshire Hathaway completes $ 11.6B acquisition of insurer Alleghany

Warren Buffett has completed the $ 11.6 billion acquisition of the Alleghany Corp. The deal is the billionaire’s largest since acquiring Precision Castparts for $ 37.2 billion in 2016. The insurer became a wholly owned subsidiary of Berkshire Hathaway.

Alleghany shareholders received $ 848.02 cash per share.

The purchase, announced in March, will further expand Berkshire’s insurance operations. Buffett’s Omaha, Nebraska-based conglomerate owns Geico, Gen Re and a number of other insurance companies.

Alleghany’s property and casualty insurance subsidiaries include reinsurer Transatlantic Holdings, specialty insurance underwriters RSUI Group and CapSpecialty.

Alleghany also adds additional companies to Berkshire’s portfolio. Alleghany owns steel fabricator W&W | AFCO Steel and toy company Jazwares. Berkshire owns BNSF Railway, several major utilities and dozens of manufacturing and retail companies, including Dairy Queen, See’s Candy and fractional aircraft owner NetJets.

WARREN BUFFETT’S BERKSHIRE HATHAWAY BOOSTS STAKE IN OCCIDENTAL PETROLEUM

Warren Buffett

Warren Buffett, chairman and CEO of Berkshire Hathaway, speaks following the annual Berkshire Hathaway shareholders meeting on May 5, 2019, in Omaha, Nebraska. (AP Photo / Nati Harnik)

Ticker Security Last Change Change%
BRK.A BERKSHIRE HATHAWAY INC. 421,610.00 -6,855.00 -1.60%
BRK.B BERKSHIRE HATHAWAY INC. 278.43 -3.61 -1.28%

Alleghany chair and CEO Joe Brandon will continue to run the unit.

Edward Jones analyst Jim Shanahan said Brandon, who previously ran a different Berkshire insurance company, could one day be a candidate to replace Vice Chair Ajit Jain and oversee all of Berkshire’s insurance companies.

Berkshire’s last major acquisition came in 2016 when it paid $ 32.36 billion to buy aviation parts maker Precision Castparts. Buffett has always been reluctant to overpay for acquisitions, and he has said Berkshire faces more competition for deals these days from private-equity firms.

PRECISION CASTPARTS A ‘PERFECT FIT’ FOR WARREN BUFFETT’S BERKSHIRE HATHAWAY, ANALYST SAYS

But Buffett has put more than $ 51 billion to work in the stock market this year, including buying up roughly $ 12 billion worth of Occidental Petroleum stock and another $ 20 billion worth of Chevron shares to bet big on oil production.

Ticker Security Last Change Change%
OXY OCCIDENTAL PETROLEUM CORP. 68.46 +0.68 + 1.00%
CVX CHEVRON CORP. 168.05 +5.25 + 3.22%

Still, Berkshire was sitting on $ 105.4 billion cash at the end of the second quarter.

It will use some of that at the start of next year to more than double its stake in the Pilot chain of more than 800 truck stops across 44 states and six Canadian provinces. The terms of Buffett’s 2017 agreement call for it to boost its stake from its current 38.6% ownership to 80% in 2023. That will leave the Haslam family that runs the business based in Knoxville, Tennessee, with a 20% stake.

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Shanahan estimated that the Pilot deal will use at least $ 3.5 billion, but Berkshire has never disclosed the terms of that deal.

In addition to owning more than 90 operating companies, Berkshire holds a sizable investment portfolio with major stakes in Apple, Bank of America, American Express and Coca-Cola, among other companies.

Ticker Security Last Change Change%
AAPL APPLE INC. 143.86 +0.11 + 0.08%
BAC BANK OF AMERICA CORP. 33.92 -0.98 -2.81%
AXP AMERICAN EXPRESS CO. 144.02 -2.15 -1.47%
KO THE COCA-COLA CO. 55.96 -0.48 -0.85%

The Associated Press contributed to this article.

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