Monday, 21 November 2011

Alleghany to Acquire Transatlantic Holdings

Alleghany Corp (NYSE: Y) is holding negotiations to buy reinsurer Transatlantic Holdings (NYSE: TRH) for a total amount of $3.4 billion by paying about $59 to $60 per share. The offer is about 10 percent more than the closing price of Transatlantic on Nov. 18. Reliable sources have revealed that the deal might be announced as soon as today.
Transatlantic is a former unit of American International Group Inc. and it helps insurance companies pool their biggest risk. Its shareholders had rejected merger offers from Allied World Assurance Co., in June and also offers from Omaha, Nebraska-based Berkshire and Bermuda-based rival Validus Holdings Ltd.
On the basis of the price being offered and the company’s 61.6 million shares outstanding as on Sept. 30, the value of Transatlantic would work out to about $3.7 billion. In September the company was planning a $600 million share buyback, with half that amount being planned to be repurchased this year. As such the shares outstanding by the time a deal with Alleghany is completed, would be reduced.
Inside sources also said that an agreement between Transatlantic and Alleghany might not materialize. However, there were no comments from either of the two parties. Transatlantic has also conferred with two other potential bidders in order to identify the best offer.

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