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Buffett's Berkshire Hathaway Makes A Bid for Transatlantic

Source: WSJ - Erik Holm

Posted on 08 Aug 2011

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Warren Buffett's Berkshire Hathaway Inc. has become the third company to bid for reinsurer Translatlantic Holdings, Inc.

Buffett's insurance lieutenant, Ajit Jain, wrote to Transatlantic Chief Executive Robert Orlich with an offer on Friday, giving him until Monday night to decide whether to accept Berkshire's offer to buy the company for $52 a share.

Berkshire joins Validus Holdings Ltd. in trying to disrupt a previously agreed-upon merger between Transatlantic and another reinsurer, Allied World Assurance Co.

Transatlantic said in a statement Sunday its board would evaluate the offer, and advised shareholders to "take no action at this time and to await the Board's recommendation."The statement included the text of Mr. Jain's letter to Mr. Orlich.

The short window for Transatlantic to decide on the offer is typical of Mr. Buffett, as is a statement from Mr. Jain in his letter that Berkshire doesn't intend to conduct a due-diligence review or place any financing conditions on the deal.

Transatlantic's board had earlier said it favored the Allied World deal over a hostile bid from Validus.

The Validus offer to Transatlantic investors would give them 1.56 Validus shares and $8 in cash for each Transatlantic share. The offer valued the company at about $3.5 billion based on stock prices the day the bid was announced in June.

Allied, meanwhile, would exchange 0.88 shares for each Transatlantic share in a deal valued at $3.2 billion based on prices at the time.