Berkshire Hathaway to pay $12bn for insurance-to-toys conglomerate Alleghany

Warren Buffett has dipped into Berkshire Hathaway’s $150bn money pile with a $12bn deal for Alleghany, an insurance-to-toy manufacturing conglomerate.

Omaha-based Berkshire, which itself consists of a sequence of enormous insurers with different firms from Duracell to Kraft Heinz, mentioned on Monday that it could pay $848 per share for Alleghany.

Alleghany was based nearly 100 years in the past as a railway firm and at one level owned almost a fifth of US miles of observe. Today, it owns a spread of insurance coverage and reinsurance firms in addition to a toy producer, a funeral merchandise maker, a lodge developer and a producer of customized trailers. It produced income of $1bn final yr.

Buffett mentioned that “Berkshire would be the good everlasting dwelling for Alleghany, an organization that I’ve intently noticed for 60 years”, including that the group “has many similarities to Berkshire Hathaway”.

The value is a 29 per cent premium to Alleghany’s share value over the previous 30 days and is a a number of of 1.26 occasions the corporate’s ebook worth.

Alleghany’s chair Jefferson Kirby mentioned the deal was “a uncommon alternative to hitch forces with a like-minded and extremely revered investor and enterprise chief”.