JOIN USThe Berkshire unit, National Indemnity, entered into a confidentiality agreement with Transatlantic, according to Transatlantic. Transatlantic already has an all-stock $2.9 billion deal to merge with Allied World Assurance Company Holdings Ltd. It is also facing a hostile $2.9 billion cash-and-stock takeover offer from Validus Holdings Ltd.
Friday’s move could force these other Transatlantic suitors to sweeten their bids, and possibly unleash a bidding war for the New York-based reinsurance company. Allied World and Validus have both seen the value of their bids fall, thanks to the stock in the purchase price. The Validus bid, which at one point was nearly $400 million better than the Allied offer, has lost all its premium, thanks to adverse investor reaction to its bid and broader market turmoil.
Transatlantic first entered into a deal with Allied World in June, but its plans hit a hurdle when a month later Validus came in with an offer of its own. At the time each was made, the Allied World offer was worth $3.2 billion and the Validus offer was worth $3.5 billion.
As values of Allied World’s offer fell, Buffett’s lieutenant Ajit Jain jumped in with its $3.2 billion cash bid. Transatlantic rejected Berkshire’s offer as too low but said the bid could lead to a superior proposal, and offered to open talks if Berkshire signed a confidentiality agreement. Validus sued Transatlantic, but also offered its own books for review to pressure Transatlantic for talks with it.