Buffett needed 2 weeks for US$11.6b Alleghany purchase, baulked at Goldman fee

[NEW YORK] Warren Buffett needed just 2 weeks to put together Berkshire Hathaway's US$11.6 billion takeover of Alleghany, its largest acquisition in 6 years, even as he balked at paying the insurer's banking fee, a regulatory filing on Monday (Apr 11) shows.

Alleghany said its chief executive officer Joseph Brandon met with Buffett for dinner in New York City on Mar 7, where after some "casual conversation" Buffett offered US$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 US$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 US$848.02 per share, with the US$1.98 difference from US$850 accounting for Goldman's fee.

The merger was announced on Mar 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 Apr 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.

Buffett has praised former Goldman banker Byron Trott, working with him on purchases of food distributor McLane from Walmart 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 US$32.1 billion purchase of aircraft and industrial parts maker Precision Castparts in 2016. REUTERS