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Warren Buffett's Berkshire Hathaway completes $11.6 billion acquisition of insurance company Alleghany

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Warren Buffett completes $11.6 billion acquisition of Alleghany Corp. The deal is the billionaire’s biggest since he bought Precision Castparts for $37.2 billion in 2016. The insurer became a wholly owned subsidiary of Berkshire Hathaway.

Alleghany shareholders received $848.02 in cash per share.

The acquisition, announced in March, will further expand Berkshire’s insurance operations. Buffett’s Omaha, Nebraska-based conglomerate owns Geico, Gen Re, and a number of other insurance companies.

Alleghany’s property and casualty insurance subsidiaries include reinsurer Transatlantic Holdings, private insurance underwriters RSUI Group and CapSpecialty.

Alleghany also adds new companies to Berkshire’s portfolio. Alleghany owns steelmaker W&W|AFCO Steel and toy company Jazwares. Berkshire owns BNSF Railroad, several major utilities, and dozens of manufacturing and retail companies, including Dairy Queen, See’s Candy and fractional aircraft owner NetJets.

WARREN BUFETT’S BERKSHIRE HATHAWAY INCREASES ITS SHARE IN OCCDENTAL PETROLEUM

Warren Buffett

Warren Buffett, chairman and CEO of Berkshire Hathaway, speaks after the annual Berkshire Hathaway shareholders meeting in Omaha, Nebraska, on May 5, 2019. (AP Photo/Nati Harnik)

stock Security End Change Change %
BRK.A BERKSHIRE HATHAWAY A.S. 422,100.00 -6,365,00 -1.49%
BRK.B BERKSHIRE HATHAWAY A.S. 278.34 -3.33 -1.18%

Alleghany president and CEO Joe Brandon will continue to lead the unit.

Edward Jones analyst Jim Shanahan said Brandon, who previously ran a different Berkshire insurance company, could one day run for Vice President Ajit Jain and oversee all of Berkshire’s insurance companies.

Berkshire’s last major acquisition came in 2016, when it paid $32.36 billion to acquire aerospace parts manufacturer Precision Castparts. Buffett has always been reluctant to overpay for acquisitions and said Berkshire is facing more competition for deals from private equity firms these days.

Analyst SAYS PRECISION CASTING PARTS ARE ‘PERFECT FIT’ TO WARREN BUFFET’S BERKSHIRE HATHAWAY

But Buffett has invested more than $51 billion this year, including buying nearly $12 billion worth of Occidental Petroleum stock to run the stock market and $20 billion worth of Chevron stock to bet big on oil production.

stock Security End Change Change %
OXY OKSİDENTAL PETROL A.Ş. 68.46 +0.68 +1.00%
CVX CHEVRON CORP. 168.05 +5.25 +3.22%

Yet Berkshire was sitting on $105.4 billion in cash at the end of the second quarter.

It will use some of that to more than double its stake in the Pilot chain, which consists of more than 800 truck stops in 44 states and six Canadian provinces, early next year. The terms of Buffett’s 2017 deal require him to increase his stake from his current 38.6% ownership to 80% in 2023. This will put the Haslam family, who run the business in Knoxville, Tennessee, to have a 20% stake.

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Shanahan estimated that the pilot deal would use at least $3.5 billion, but Berkshire never disclosed the terms of that deal.

In addition to owning more than 90 operating companies, Berkshire has a sizable investment portfolio with large stakes in Apple, Bank of America, American Express and Coca-Cola, among other companies.

stock Security End Change Change %
AAPL ELMA INC. 143.86 +0.11 +0.08%
BAC BANK OF AMERICA CORP. 33.92 -0.98 -2.81%
AXP AMERICAN EXPRESS CO., LTD. 144.02 -2.15 -1.47%
KO COCA-COLA CO. 55.96 -0.48 -0.85%

The Associated Press contributed to this article.

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