Money Matters, Simplified.
Buffett’s Berkshire Hathaway joins bidding for Transatlantic
by Anter Prakash Singh - August 8, 2011 - comments
Berkshire Hathaway, Inc. owned by Warren Buffett, has jumped into the bidding war for the Transatlantic Holdings, Inc., a reinsurer based in New York.
Berkshire Hathaway is the third company to bid for the reinsurer, and its offer is the best so far.
Berkshire Hathaway offering $52 per share
Berkshire Hathaway entered the bidding when its group company, National Indemnity Co. offered $52 per share to purchase all the outstanding shares of the Transatlantic.
The $3.25 billion offer is the best one as compared to the two bids made by Allied World Assurance, and Validus Holdings Ltd.
Berkshire’s Ajit Jain has written a letter to Robert Orlich, CEO of Transatlantic, in which he made the offer to buy all the outstanding shares of the company at $52, which Jain believes is “an attractive offer.”
“As such, I am now writing to formally writing to inform you of National Indemnity’s commitment to do so at $52 per share under customary terms for a stock purchase agreement of a publicly traded company to be agreed,” stated Jain in his letter.
Transatlantic informed that Jain had given them till Monday night to decide about the offer by Berkshire.
Transatlantic said that its board of directors will be evaluating the offer and has advised its shareholders to not to take any action and wait for the recommendations of the board.
Before the bid by Berkshire Hathaway, Transatlantic had agreed for a merger with Allied World Assurance Co. in June this year but in July Validus Holdings made an unsolicited offer and also called upon the shareholders of Transatlantic to vote against the offer by the Allied World.
Merger activity to continue for some time
Berkshire Hathaway has made a considerable part of profit from insurance. Both Buffet and his Jain have purchased policies from other insurers.
Transatlantic is among the largest reinsurers in the United States, and offers medical malpractice, aviation, auto liability and directors’ and officers’ reinsurance.
It primarily deals in casualty reinsurance, thereby providing backup protection to the insurance companies against large liability loss.
Before the bid by Berkshire Hathaway, Transatlantic had agreed for a merger with Allied World Assurance Co. in June this year but in July Validus Holdings made an unsolicited offer and also called upon the shareholders of Transatlantic to vote against the offer by the Allied World.