Warren Buffett's Berkshire Hathaway Inc reinstated its $3.25 billion offer to buy Transatlantic Holdings Inc for less than book value and gave the reinsurer until the close of business today to accept a bid it previously said was insufficient.
Berkshire's National Indemnity renewed its $52-a-share cash bid in a September 16 letter and gave Transatlantic Chief Executive Officer Robert Orlich a three-day deadline, New York-based Transatlantic said in a statement today. "While further talks may occur, no further talks are currently scheduled," Transatlantic said.
Berkshire reinsurance chief Ajit Jain is seeking to buy Transatlantic after the target firm last week canceled a deal to merge with Allied World Assurance Co. Holdings AG amid shareholder opposition. Transatlantic, which also received a cash-and-stock offer from Validus Holdings Ltd, fell 69 cents, or 1.4 per cent, to $48.08 at 10:07 a.m. in New York Stock Exchange composite trading.
"Some of their largest holders I suspect would prefer not to get cashed out," said Thomas Russo, a partner at Berkshire investor Gardner Russo & Gardner. "Even though it's higher in current value, it may not meet their original long-term expectations," Russo said of the Berkshire bid.
The bid from Bermuda-based Validus values Transatlantic at about $47.41 a share, based on the September 16 closing price. That compares with a book value of $67.76 per share, according to data compiled by Bloomberg.
Buffett has sought to distinguish his firm by vowing not to sell companies he takes over and sticking to his initial offers.
"We don't participate in auctions," the company said in its most recent annual report.
'OPPORTUNISTIC' OFFER
Transatlantic has said a cash offer would deny its investors the chance to gain from a share rebound at a combined company. The reinsurer said last week that Berkshire's bid "would not deliver fair value."
Jain made a $52-a-share on August 5 and Buffett said later last month that Berkshire's bid had expired. The renewed offer was made on the same day that Transatlantic announced the end of its deal with Bermuda-based Allied World.
"National Indemnity has neither increased its opportunistic $52 per share proposal nor shown interest in conducting full due diligence or holding discussions that could lead to a higher offer," Transatlantic said in today's statement. Buffett didn't immediately respond to an interview request e-mailed to his assistant.
Validus was invited last week by Transatlantic to enter into negotiations. The unsolicited cash-and-stock bid from Validus was inadequate, Transatlantic said on September 16.
Validus fell 15 cents to $25.17. Berkshire slid $2,090, or 2 per cent, to $105,010.
