A New York City dinner between Warren Buffett and Alleghany Corp. Chief Executive Officer Joseph Brandon kicked off one of Berkshire Hathaway Inc.’s latest deal hunts.
The pair met for dinner on March 7, when Buffett made it clear that Berkshire was interested in buying Alleghany for $850 a share, according to a regulatory filing released Monday. That conversation would jump-start Berkshire’s bid for Alleghany that culminated in a $11.6 billion deal for the insurer announced later that month.
It’s one of the biggest acquisitions in years for Berkshire and Buffett, its billionaire CEO. He has revved up his deal machine recently, with the conglomerate also buying up shares in Occidental Petroleum Corp. and revealing a new equity bet on HP Inc.
At that dinner, Buffett insisted that the price wouldn’t include fees for financial advisers. That quirk resulted in an odd $848.02 announced deal price. The fee for Goldman Sachs Group Inc., which is advising Alleghany, would come out of the proceeds for insurer’s shareholders.
The agreement would have to survive some push-back by Alleghany’s negotiators. Jefferson Kirby, the company’s chairman, pushed Buffett on the price at a meeting in Omaha, asking him to increase the offer or eliminate the deduction for the financial adviser fee.
He also pushed for a lucrative — but often unattainable — feature in a Buffett deal: Using Berkshire shares as a portion of the offer. Buffett, who has talked about his dismay in using Berkshire stock to buy Dexter Shoe and General Re, held firm.
Goldman ultimately contacted 23 potential strategic bidders and eight potential financial-sponsor bidders during a “go-shop” period to see if they’d have a superior offer for Alleghany, the filing shows. The go-shop period ends at 11:59 p.m. New York time on April 14.
