By Jonathan Stamp
NEW YORK – It took Warren Buffett just two weeks to put together Berkshire Hathaway Inc’s $11.6 billion acquisition of Alleghany Corp, its largest acquisition in six years, despite refusing to pay the insurer’s bank fee to pay, as an application for approval submitted on Monday shows.
Alleghany said his chief executive officer, Joseph Brandon, met with Buffett for dinner on March 7 in New York City, where, after some “casual discussions,” Buffett offered $850 a share in cash for the company, minus the banker’s fee at Goldman Sachs.
Five days later, Brandon and Alleghany chairman Jefferson Kirby met Buffett in Omaha, Nebraska, where Kirby asked Buffett to make a higher offer to pay Goldman’s $27 million fee or use Berkshire stock to make part of the purchase finance.
“Mr. Buffett reiterated the terms of his original offer and made it clear that he had no intention of changing his position on those issues,” the filing reads.
Omaha-based Berkshire eventually agreed to pay $848.02 per share, with the difference of $1.98 to $850 making up Goldman’s fee.
The merger was announced on March 21st. Alleghany had 25 days to potentially find a better deal. Goldman has since interviewed 31 potential bidders about their interest, the filing says. The “Go Shop” period ends on April 14th.
Brandon ran Berkshire’s General Re unit from 2001 to 2008.
Buffett, 91, has long spoken out against the cost of doing business on Wall Street.
He rarely uses the investment banks at Berkshire and relies on 98-year-old Vice Chairman Charlie Munger to make important capital decisions.
Buffett has praised former Goldman banker Byron Trott, who worked with him on the purchase of grocer McLane Co from Walmart Inc and a large stake in truck stop operator Pilot Flying J from billionaire Jimmy Haslam’s family.
The Alleghany acquisition is expected to close in the fourth quarter, subject to regulatory and Alleghany shareholder approvals.
Berkshire’s last major acquisition was its $32.1 billion purchase of aircraft and industrial parts maker Precision Castparts in 2016.
(Reporting by Jonathan Stempel in New York; Editing by Bernard Orr)