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Alleghany shareholder sues to block Berkshire’s $11.6 billion buyout over lack of disclosure

Alleghany Corp, which last month agreed to be taken over by Warren Buffett’s Berkshire Hathaway Inc, was sued Wednesday by a shareholder who accused the insurance company of making inadequate and misleading disclosures about the takeover of 11 .6 billion.

In a lawsuit filed in Manhattan federal court, plaintiff Shiva Stein says Alleghany failed in a power of attorney statement to adequately explain the financial basis of the ‘fairness opinion’ issued by its bankers at Goldman Sachs, who assessed whether the deal was fair to shareholders.

Absent additional disclosures, “Complainant will not be able to make an informed decision regarding voting in favor of the proposed transaction, and is therefore at risk of irreparable harm,” the complaint states. .

Stein wants to stop Berkshire Hathaway (BRKB) from buying New York-based Alleghany unless more disclosures are made, and is also seeking unspecified damages. The New Jersey resident did not argue that the redemption price was too low.

Alleghany did not immediately respond to requests for comment. A lawyer for the plaintiff did not immediately respond to a similar request. Berkshire is not a defendant.

Shareholders like Stein often file lawsuits to block corporate mergers when they find the terms unfair or the disclosures too sparse.

On April 1, Stein sued Mandiant Inc to block Google’s $5.4 billion cybersecurity firm’s takeover of Alphabet Inc, also citing an alleged lack of disclosures to support a fairness opinion by Goldman.

Berkshire agreed on March 21 to pay $848.02 per share for Alleghany, a premium of 25%.

Goldman’s fairness opinion called the price “financially fair” to Alleghany shareholders.

The purchase would expand Berkshire’s extensive portfolio of insurers, including Geico and General Re. It would also reunite Buffett with Alleghany chief executive Joseph Brandon, who led General Re from 2001 to 2008.

The case is Stein v. Alleghany Corp et al, US District Court, Southern District of New York, No. 22-03057.


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