This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
See Cramer's multi-million dollar portfolio for FREE and get his new book Get Rich Carefully! Learn More

Alleghany Buys Transatlantic, Ends Bidding War

Updated from 7:53 a.m. EST, and with analyst comment.

NEW YORK (TheStreet) -- Transatlantic Holdings (TRH) on Monday announced an agreement to be acquired by Alleghany (Y) for $3.4 billion.

The New York reinsurer's agreement to sell to Alleghany for $59.79 cents a share in cash and stock wards off a rival hostile bid by Validus (VR), which on Nov. 8 mailed a letter to Transatlantic's shareholders, increasing its offer to $57.67 a share.

On Nov 10, Transatlantic CEO Robert Orlich said in a letter to shareholders that Validus' offer undervalued the company.

The Insurance Insider reported on Friday that an investor group headed by Stone Point Capital and including J.C. Flowers & Co. had made an all-cash offer for Transatlantic, valued at "more than $60 a share."

The Alleghany deal represents only a 10% premium from Transatlantic's closing price of $54.43, but the target company said that Alleghany's bid was "a 36% premium to Transatlantic's closing stock price on June 10, 2011, the last trading day before public announcement of the since-terminated merger agreement with Allied World Assurance (AWH)."

Transatlantic said it expected the sale to Alleghany to be "tax free to Transatlantic stockholders," who would receive "per-share consideration consisting of 0.145 Alleghany common shares and $14.22 in cash," with an option "to receive cash or stock consideration, subject to proration in the event of oversubscription."

Transatlantic in August received an unsolicited acquisition bid from National Indemnity -- a subsidiary of Warren Buffett's Berkshire Hathaway (BRK.B) -- for $52 a share.

Transatlantic said following the completion of the transaction that it would "become an independent stand-alone subsidiary of Alleghany," and expected that it would "maintain its current financial strength ratings of 'A+' from Standard & Poor's and 'A' from A.M. Best."

Following the departure of outgoing Transatlantic CEO Robert Orlich at the end of the year, Transatlantic President Michael Sapnar will take on the additional role of CEO.

Gavin Magor, a senior analyst with Weiss Ratings, said "Transatlantic is lucky to be attracting bids, because of their excessive claims. The price being paid -- of roughly 85% book value -- is fair, but with Alleghany having one of the highest price-to-earnings ratios among insurers, Transatlantic's shareholders might have preferred to see an all-cash deal."

-- Written by Philip van Doorn in Jupiter, Fla.

To contact the writer, click here: Philip van Doorn.

To follow the writer on Twitter, go to http://twitter.com/PhilipvanDoorn.

Stock quotes in this article: TRH, Y, VR, BRK.B, BRK.A 
Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
DOW 16,408.54 -16.31 -0.10%
S&P 500 1,864.85 +2.54 0.14%
NASDAQ 4,095.5160 +9.2910 0.23%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs