graphic
News > Companies
Berkshire merger tax-free
December 17, 1998: 2:15 p.m. ET

Buffett's investment vehicle gets tax-free status for $22B General Re merger
graphic
graphic graphic
graphic
NEW YORK (CNNfn) - Wall Street investment mogul Warren Buffett got a green light from the Internal Revenue Service on Thursday to proceed with a tax-free merger of the anchor of his insurance empire, Berkshire Hathaway Inc., with reinsurance giant General Re Corp.
     Under terms of the merger, agreed on June 19, General Re shareholders can elect to receive either 0.0035 Class A Berkshire shares or 0.105 Class B shares for each share of General Re common stock.
     The deal values each General Re (GRN) share at $276.50 , for a total transaction price-tag of $22 billion. Berkshire will account for the merger as a purchase.
     After the transaction closes, shareholders of the Stamford, Conn.-based General Re, the parent company of General Reinsurance Corp. and the National Reinsurance Corp, the largest professional property-casualty insurance group in the United States, would own 18 percent of Berkshire Hathaway.
     General Re has granted Berkshire Hathaway (BRK.A) and (BRK.B) options to purchase under certain conditions up to 19.9 percent of General Re's outstanding shares at the transaction price, subject to a cash limit of 3 percent of the deal's total value.
     Berkshire Hathaway said the favorable tax ruling from the IRS Thursday paved the way for the completion of the acquisition after the close of New York trading on December 21.
     As a result of the deal, General Re - which paid a third-quarter dividend of 59 cents a share on Sept. 30 - won't pay a fourth-quarter dividend.
     Berkshire Hathaway, Buffett's Omaha, Neb.-based investment vehicle, operates property/casualty insurance and reinsurance businesses through subsidiaries that include National Indemnity and GEICO. The company has also amassed significant minority stakes in firms such as American Express, Coca-Cola, Gillette, Walt Disney, The Washington Post Co., and Wells Fargo.
     Berkshire reported sales of $10.4 billion in 1997.
     General Re, the largest reinsurer in the United States, posted revenues of $8.25 billion last year.
     Class A shares of Berkshire Hathaway were off 2,475 points, or 3.9 percent, at 61,000 on the The New York Stock Exchange Thursday, while class B shares traded down 81-7/8, or 3.87 percent, at 2,035-1/8.
     General Re stock was down 8-1/4, or 3.77 percent, at 210-3/4.Back to top

  RELATED STORIES

Buffett dumping silver? - Dec. 4, 1998

Berkshire operating profit up - Nov. 12, 1998

Berkshire in $22B deal - June 19, 1998

  RELATED SITES

related site link

Berkshire Hathaway


Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney




graphic


Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.