Buffett Watch

Berkshire Hathaway Says No to Bidding War, After Transatlantic Says No to Berkshire

One of Warren Buffett's guiding principles is that he won't get into a bidding war for an acquisition.

Ajit Jain, one of Buffett's top Berkshire execs, did get into the fray for reinsurer Transatlantic Holdings , but he's not staying in the fight.

In a news release this morning, Transatlantic says it received a letter Friday from Jain, president of Berkshire's National Indemnity unit, reinstating a previous offer of $52 a share.

Even though Transatlantic already had a merger deal with Allied World Assurance , Berkshire's early-August $52 bid was good enough to get Transatlantic to enter into a confidentiality agreement and begin talks.  At the time, Transatlantic said, "the offer does not constitute a Superior Proposal, but is reasonably likely to lead to a Superior Proposal" to its Allied deal.

That didn't happen, and today Transatlantic says Berkshire's unchanged bid is still too low:

"The Transatlantic Board of Directors believes that selling Transatlantic for cash at the substantial discount to book value represented by the National Indemnity proposal simply would not deliver fair value to its stockholders.  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 says it believes its book value is closer to $69-$70 per share.

National Indemnity's letter was sent Friday after Transatlantic and Allied World called off their planned all-stock deal that valued Transatlantic at about $47 per share as of Thursday evening.

That letter says its reinstated offer expires at the end of business today, Monday.  Transatlantic says no further talks are scheduled.

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