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How Warren Buffett cracked $11.6 billion deal over dinner at New York restaurant
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How Warren Buffett cracked $11.6 billion deal over dinner at New York restaurant
Apr 13, 2022 2:39 AM

Warren Buffett needed just two weeks to put together Berkshire Hathaway Inc's $11.6 billion takeover of Alleghany Corp, its largest acquisition in six years, even as he balked at paying the insurer's banking fee, a regulatory filing on Monday shows.

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Alleghany said its Chief Executive Officer Joseph Brandon met with Buffett for dinner in New York City on March 7, where after some "casual conversation" Buffett offered $850 per share in cash for the company, less the fee for bankers 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, pay Goldman's $27 million fee, or use Berkshire stock to fund part of the purchase.

"Mr. Buffett reiterated the terms of his original offer, indicating firmly he did not intend to change his position on those points," the filing said.

Berkshire, which is based in Omaha, ultimately agreed to pay $848.02 per share, with the $1.98 difference from $850 accounting for Goldman's fee.

The merger was announced on March 21. Alleghany got 25 days to potentially find a better offer. Goldman has since asked 31 potential bidders about their interest, the filing said. The "go-shop" period ends on April 14.

Brandon led Berkshire's General Re unit from 2001 to 2008.

Buffett, 91, has long objected to the costs of doing business on Wall Street.

He rarely uses investment banks at Berkshire, relying on 98-year-old Vice Chairman Charlie Munger for help in major capital decisions.

Also Read: Tough for young people to get rich and stay rich, says Charlie Munger

Buffett has praised former Goldman banker Byron Trott, working with him on purchases of food distributor McLane Co from Walmart Inc and a large stake in truck stop operator Pilot Flying J from the family of billionaire Jimmy Haslam.

The Alleghany purchase is expected to close in the fourth quarter, pending regulatory and Alleghany shareholder approvals.

Berkshire's last major acquisition was the $32.1 billion purchase of aircraft and industrial parts maker Precision Castparts in 2016.

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