Transatlantic, Alleghany Partner in $3.4 Billion Transaction

Alleghany Corp. and Transatlantic Holdings Inc. have entered into a definitive agreement to combine Transatlantic with Alleghany. Under the terms of the transaction, the stockholders of Transatlantic will receive aggregate consideration, currently valued at $59.79 per share in stock and cash, or about $3.4 billion.

Transatlantic says common shares will be exchanged for per-share consideration, consisting of 0.145 Alleghany common shares and $14.22 in cash. Transatlantic stockholders may elect to receive cash or stock consideration, subject to proration in the event of oversubscription. The stock consideration is expected to be tax-free to Transatlantic stockholders.

Transatlantic adds that, based on closing market prices on Nov. 18, 2011, the transaction represents a 36-percent premium to Transatlantic's closing stock price on June 10, 2011, and a premium of 10 percent to the Transatlantic closing stock price on Nov. 18, 2011. The transaction values Transatlantic at 86 percent of book value per share at Sept. 30, 2011. After adjusting for subsequent share repurchases, the transaction is accretive to Alleghany's Sept. 30, 2011, book value per share by about 7 percent, and tangible book value per share by about 10 percent.

Transatlantic says it will become an independent, stand-alone subsidiary of Alleghany. The transaction is expected to close in the first quarter of 2012 and is not subject to a financing condition.