Berkshire Hathaway Inc. is buying Alleghany Corp. for $11.6 billion in cash as Warren Buffett returns to the dealmaking he has shied away from in recent years.
Buffett's company will acquire all outstanding Alleghany shares for $848.02 each in cash. The transaction represents a 29% premium to the New York-based insurer's average stock price over the last 30 days, and a 16% premium to its 52-week high closing price, the firms said in a statement Monday.
With the Alleghany deal, Buffett is diving deeper into insurance, an industry that has been key to the growth of Berkshire into a conglomerate with a market value of more than $750 billion.
Omaha, Nebraska-based Berkshire will gain a large property-casualty insurer that also has reinsurance operations through its Transatlantic Holdings Inc. unit.
Alleghany is run by Joseph Brandon, previously chief executive officer of a Berkshire insurer, General Re.
"Berkshire will be the perfect permanent home for Alleghany, a company that I have closely observed for 60 years," Buffett, Berkshire's CEO, said in the statement. "I am particularly delighted that I will once again work together with my longtime friend, Joe Brandon."
The transaction is Berkshire's largest since its 2016 acquisition of Precision Castparts Corp., according to data compiled by Bloomberg. That deal was valued at $37.2 billion, including debt.
Still, the Alleghany purchase price represents just 7.9% of Berkshire's stockpile of cash, leaving the billionaire investor with a big war chest for other deals.
Buffett has been seeking ways to deploy some of his conglomerate's cash — almost $150 billion in total — into higher-returning assets, but has struggled to find attractive options given high valuations.
He's increasingly turned to stock buybacks, a capital-deployment move he largely shunned for decades, and earlier this month he built up Berkshire's stake in Occidental Petroleum Corp.
