Buffett ends drought by buying Ghanaian Insurance Company for $11.6 billion

NEW YORK, March 21 (Reuters) – Berkshire Hathaway Inc from Warren Buffett (BRKa.N) Entered into an agreement to purchase Rich Corp. insurance company (YN) for $11.6 billion, just weeks after the 91-year-old billionaire lamented the lack of quality investment opportunities.

The Ghanaian company, whose business includes reinsurer Transatlantic Holdings, will expand Berkshire’s large portfolio of insurers, which includes auto insurer Geico, reinsurer General Re and a unit that insures against major catastrophes and unusual risks.

“Berkshire would be the perfect permanent home for The Ghanaian Company, a company I have watched closely for 60 years,” Buffett, who has run Berkshire since 1965, said in a statement.

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The acquisition, one of the five largest in Berkshire’s history, would reunite Buffett with Joseph Brandon, who led General Ray from 2001 to 2008 and became Ghana’s CEO in December.

It would also end Buffett’s six-year drought of big acquisitions, and help him deploy some of $146.7 billion in cash and cash equivalents to Omaha, Nebraska at the end of the year.

Buffett lamented in his February 26 annual letter to shareholders that “internal opportunities drive far better returns than acquisitions,” and that too little “excites us” in stock markets. Read more pledged to keep $30 billion in cash on hand.

Berkshire agreed to pay $848.02 in cash per share of Richie’s company stock, a 25% increase over Friday’s closing price.

Al Afghani has a 25 day “go shopping” period to find a better offer. Berkshire is not involved in bidding wars.

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The transaction is expected to close in the fourth quarter, pending regulatory approval and Afghan shareholder approval. The Rich will operate as an independent Berkshire unit.

Brandon said in a statement that Berkshire “embodies our long-term management philosophy.”

Insurance typically generates more than 20% of operating profit at Berkshire, whose dozens of businesses also include the BNSF rail line, Berkshire Hathaway Energy and Dairy Queen ice cream.

Berkshire also invests hundreds of billions of dollars in stocks such as Apple Inc (AAPL.O)This year, it invested more than $6.4 billion in Occidental Petroleum. Read more

New York-based Alleghany was founded in 1929 by railroad pioneers Oris and Mantis Van Sweringen.

It was transformed into an insurance and investment company under the leadership of Fred Morgan Kirby II from 1967 to 1992.

The rich are sometimes seen as Mini Berkshires, and Buffett said the companies have “many similarities.”

Other Ghanaian units include RSUI Group, a wholesale specialist insurance company, and CapSpecialty, a specialist insurer.

Goldman Sachs and law firm Willkie Farr & Gallagher advised Ghanaian about the deal. The law firm Munger, Tolles & Olson advised Berkshire.

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Covering by Noor Zainab Hussain in Bengaluru and Jonathan Stemple in New York Additional reporting by Mahnaz Yasmin in Bengaluru Editing: Sumiyadeb Chakrabarti and Mark Potter

Our criteria: Thomson Reuters Trust Principles.

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