Buffett unit bids $3.2 bn for Transatlantic

A unit of Warren Buffett’s Berkshire Hathaway Inc jumped into the bidding war over Transatlantic Holdings Inc, offering to buy the reinsurer for $3.24 billion.

Transatlantic’s board said today it would “carefully consider and evaluate” the $52-per-share offer by Berkshire unit National Indemnity Co.

Buffett’s bid tops two rival offers put before Transatlantic.

Transatlantic has an agreement to be bought by Allied World Assurance Company Holdings Ltd in a deal currently worth $44.22 per share, or $2.75 billion.

Validus Holdings Ltd, meanwhile, has launched a hostile bid for Transatlantic, with a proposal currently worth $46.36 per share, or $2.89 billion.

Buffett’s bid values Transatlantic’s shares at $52 apiece, a 15 per cent premium to Friday’s closing price of $45.24 on the New York Stock Exchange.

Today, Transatlantic’s board backed its recommendation of the agreement with Allied World and advised shareholders to await the board’s decision regarding the Buffett proposal before taking any action.

Goldman, Sachs & Co and Moelis & Co LLC are acting as financial advisers and Gibson, Dunn & Crutcher LLP is acting as legal counsel to Transatlantic.

BIDDING WAR
Allied World and Validus have been canvassing shareholders to drum up support for their proposals.

Allied World has been making the case that its deal with Transatlantic would save money and create a company with a better risk profile, two sources told Reuters last month.

It says Transatlantic shareholders also would get a specialty insurance business with their plan, while the company would double down on reinsurance in the rival offer.

Validus has argued that its offer was still worth more than Allied World’s, a third source told Reuters in July.

It was also raising questions about the industrial logic of the rival deal, arguing that Allied World’s specialty insurance business competes with many reinsurance clients of Transatlantic, according to the source.

Validus is digging in for a long battle, as it did two years ago when it won a months-long bidding war for Bermuda reinsurance rival IPC, the source said.