(Berkshire Hathaway) Shares of insurance company Alleghany Corp. rose more than 27% on Monday after Berkshire Hathaway announced an $11.6 billion purchase deal.
The deal allows Berkshire to acquire all outstanding shares of Alleghany for $848.02 per share in cash, a multiple of 1.26 times the target’s book value on the last day of 2021.
The stock purchase price also represents about a 29% premium to Alleghany’s average price for the last month. The purchase price is also at a 16% premium to Alleghany’s 52-week high closing price.
Berkshire’s Chairman and CEO Warren E. Buffet described Alleghany as a perfect acquisition, saying the target has created businesses that closely mirror his company.
The deal allows Alleghany to continue soliciting further acquisition bids in a 25-day “go-shop” period, subject to the merger terms.
The deal is expected to finalize in the fourth quarter of this year, subject to approval by Alleghany stockholders. Alleghany will continue operating as an independent unit of Berkshire following the deal closure.
Y: NYSE is up 27.01%, BRK.A: NYSE is down -0.57%.
