Alleghany Corp Soars 24% on Acquisition From Berkshire Hathaway

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Ollie Martin
Updated: 21 Mar 2022

Key points:

  • Buffett's Berkshire Hathaway secures Alleghany Corp acquisition for $11.6B
  • At a purchase price of $842.02 per share, Y stock opened this morning with a 25% premium
  • Buffett has had his eye on the insurance company for 60 years, citing similarities to Berkshire

Shares of Alleghany Corp skyrocketed nearly 25% in Monday premarket trading on the completed acquisition from Berkshire Hathaway, the firm steered by world-renowned investor Warren Buffet. The $11.6B total accounts for a share purchase price of $842.02, nearly a 25% premium on Friday’s closing price of $676.75. 

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Alleghany investors should be relishing the news this morning bearing in mind Berkshire’s known track record with insurance companies; including Geico Auto and General Re reinsurance. 

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Alleghany Corp, operating from New York, specializes largely in property and casualty reinsurance and insurance via subsidies and various investments. This was by no means a rash purchase and is in fact an acquisition that had been on Buffett’s mind for some time now; as stated this morning:

“Berkshire will be the perfect permanent home for Alleghany, a company that I have closely observed for 60 years…Throughout 85 years the Kirby family has created a business that has many similarities to Berkshire Hathaway” 

The acquisition will bolster Berkshire’s insurance assets as well as offer increased shareholder value to Alleghany investors. The Berkshire ‘tag’ might be attractive enough even if it wasn’t for the 25% premium adopted onto last week’s share price. The deal involves a 25-day “go-shop” period and is expected to close in Q422, unto which Alleghany will operate as a stand-alone arm of Berkshire Hathaway. 

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