Charlie Posted March 21, 2022 Posted March 21, 2022 Berkshire Hathaway to Acquire Alleghany Corporation for $848.02 Per Share in $11.6 Billion Transaction https://www.berkshirehathaway.com/news/mar2122.pdf Cheers!
nwoodman Posted March 21, 2022 Posted March 21, 2022 7 minutes ago, Charlie said: Berkshire Hathaway to Acquire Alleghany Corporation for $848.02 Per Share in $11.6 Billion Transaction https://www.berkshirehathaway.com/news/mar2122.pdf Cheers! Awesome
wabuffo Posted March 21, 2022 Posted March 21, 2022 (edited) Good to see that Buffett is making an all-cash acquisition and not issuing any BRK stock. I wonder if a superior bid to BRK's offer comes in and, if so, what the break-up fee is. Buffett must really be worried about inflation - he's putting the cash pile to work w/ OXY, Y. What else will he go after next? Bill Edited March 21, 2022 by wabuffo
Williams406 Posted March 21, 2022 Posted March 21, 2022 Long-time admirer of Alleghany (though not for as long as Buffett!) and former CEO Weston Hicks. Current CEO? Joe Brandon. $22 billion investment portfolio.
mjm Posted March 21, 2022 Posted March 21, 2022 (edited) could he be beefing up on people to help run insurance at BRK along with the company itself? Edited March 21, 2022 by mjm
ValueMaven Posted March 21, 2022 Posted March 21, 2022 I like the deal. Y has a bunch of really boring businesses, but is very profitable and strong underwriters from the Insurance side. Diversifies Berkshire insurance exposure. I know Buffett loved Brandon at one point - but wasnt he forced out of Gen Re due to a weird AIG transaction back in the day? Obviously Buffett/Jain knows a lot more about this when we do. Good use of capital and a fair price. Let's hope this closes.
ValueMaven Posted March 21, 2022 Posted March 21, 2022 Weston Hicks was an AWESOME CEO. I'd also pointout that John Burns back in the day helped to create BNSF - with the merger of Burlington Northern and the Santa Fa railroad ... a lot of history here.
ValueMaven Posted March 21, 2022 Posted March 21, 2022 reading the press release - looks like Buffett still loves Brandon: 'I am particularly delighted that I will once again work together with my long-time friend, Joe Brandon'
ander Posted March 21, 2022 Posted March 21, 2022 I'm not familiar with Allegheny. Does the transaction add new lines of business that Berkshire isn't involved with or is it just more with substantial overlap?
Xerxes Posted March 21, 2022 Posted March 21, 2022 It is an old episode but was informative when I listened to it last year
scorpioncapital Posted March 21, 2022 Posted March 21, 2022 didn't look at Y portfolio but is it similar to genre where they increased the cash equivalents portion of their float without the capital gains tax of selling shares with unrealized gains?
gfp Posted March 21, 2022 Posted March 21, 2022 (edited) Ajit has been a big fan of TransRe for a long time and did a quota share with them last year. Also, I don't think Buffett really wanted to fire Joe Brandon over that AIG "scandal." I think Warren thought Berkshire/GenRe had accounted for the transaction properly but regulators wanted some heads on the Berkshire side as well. FWIW, Alleghany Capital has a steel building/stadium subsidiary that built MSGE's Sphere. Here is a recent investor presentation for Y: https://s24.q4cdn.com/857140222/files/doc_financials/2021/q4/Alleghany-Corporation-Fourth-Quarter-Investor-Presentation.pdf Edited March 21, 2022 by gfp
mjm Posted March 21, 2022 Posted March 21, 2022 remember Y had huge position relative to their portfolio at one time in BNSF.
gfp Posted March 21, 2022 Posted March 21, 2022 Alleghany trading up past the deal price - hopefully the go-shop doesn't put the company with someone else. I just sold out of the Y shares I had at 852
ValueMaven Posted March 21, 2022 Posted March 21, 2022 I'm a big fan of the deal and the price paid. Glad it finally happened
wabuffo Posted March 21, 2022 Posted March 21, 2022 (edited) I would like to point out that Buffett/BRK seems to buy these leveraged bond portfolios (ie, P&C insurers) at the tippy-top of aging, multi-decade bull markets right before big equity market declines. 1966- National Indemnity 1998 - Gen Re 2022 - Alleghany (?) coincidence... or cue ominous sounding music.... Bill Edited March 21, 2022 by wabuffo
gfp Posted March 21, 2022 Posted March 21, 2022 This one seems pretty small to make much of a difference - 22 or 23 Billion in investments. I have a feeling the phone rang and that is the extent of the timing.
mjm Posted March 21, 2022 Posted March 21, 2022 Transatlantic Holdings, Inc. was a buyout target by BRK in 2012, but was trumped by Y after BRK refused to raise its offer( does it ever). Buffett is trying to get the whole enchilada 10 years later (unless someone offers more, in which case doubt he would raise his bid).
gfp Posted March 21, 2022 Posted March 21, 2022 (edited) 5 minutes ago, mjm said: Transatlantic Holdings, Inc. was a buyout target by BRK in 2012, but was trumped by Y after BRK refused to raise its offer( does it ever). Buffett is trying to get the whole enchilada 10 years later (unless someone offers more, in which case doubt he would raise his bid). I think that Transatlantic bid by Ajit was some sort of favor to Transatlantic management. I forget the specifics but I don't think Berkshire was expecting to actually acquire the company - although they were certainly willing to at their bid price. I'll have to look back into why I formed that opinion but I remember considering it a favor Ajit did for a respected colleague. edit - maybe it was to keep Validus from getting Transatlantic? Edited March 21, 2022 by gfp
gfp Posted March 21, 2022 Posted March 21, 2022 47 minutes ago, gfp said: This one seems pretty small to make much of a difference - 22 or 23 Billion in investments. I have a feeling the phone rang and that is the extent of the timing. I guess I was wrong on "the phone rang" part - Barrons has a source close to the deal reporting that Berkshire initiated the transaction. https://www.barrons.com/articles/berkshire-hathaway-deal-for-insurer-alleghany-is-great-for-berkshire-not-so-good-for-alleghany-51647877030 Quote The Berkshire deal appears to have come about pretty quickly, which is typical for Buffett who tends to make rapid decisions. Berkshire as usual didn’t use an investment banker—reflecting Buffett’s disdain for them. Berkshire initiated the transaction talks, according to a person familiar with the deal.
sleepydragon Posted March 21, 2022 Posted March 21, 2022 58 minutes ago, wabuffo said: I would like to point out that Buffett/BRK seems to buy these leveraged bond portfolios (ie, P&C insurers) at the tippy-top of aging, multi-decade bull markets right before big equity market declines. 1966- National Indemnity 1998 - Gen Re 2022 - Alleghany (?) coincidence... or cue ominous sounding music.... Bill Brk’s stock portfolio ‘s bond proportion increases as a result.
wabuffo Posted March 21, 2022 Posted March 21, 2022 This one seems pretty small to make much of a difference That's the wrong way to look at it. Bill
ValueMaven Posted March 21, 2022 Posted March 21, 2022 I read the barrons article. They suggested Markel could bid with stock. I highly, highly doubt that happens. The article is a very interesting read.
gfp Posted March 21, 2022 Posted March 21, 2022 24 minutes ago, wabuffo said: This one seems pretty small to make much of a difference That's the wrong way to look at it. Bill What's the right way to think about it? Alleghany has about a $16 Billion bond portfolio, FWIW.
wabuffo Posted March 21, 2022 Posted March 21, 2022 (edited) What's the right way to think about it? From the seller POV. The sellers we're talking about are smart & and as they look out, they see falling bond prices (and equity values). Not much fun when you are holding a large bond (and to some degree equity) portfolio. Bill Edited March 21, 2022 by wabuffo
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