Goldman Sachs Snubbed by Buffett over Strange Takeover Share Price

    Warren Buffet, the CEO of Berkshire Hathaway, has shown his disdain for bankers of Wall Street with an oddball share pricing of the latest takeover of Alleghany Corp. involving a multibillion-dollar deal. 

    Bloomberg News reports a price of $848.02 of every share of Alleghany Corp. that stockholders will get from Berkshire Hathaway Inc. after the takeover. This strange pricing results from Buffet’s unwillingness to accept the banking fee set by Goldman Sachs Group Inc., advising the insurer.

    Buffet’s unwillingness to pay Goldman Sachs

    Berkshire Hathaway was willing to pay $850 per share of Alleghany, with Buffet making it clear to the insurer that he did not want to pay the fees for Goldman Sachs, according to a person who has information on the matter but did not want to be identified as the discussion is still private. So, any banking advisory fees will be paid out of the share holders’ money proceeds. This resulted in the new share purchase price of $848.02 revealed in the regulatory filings that mentioned roughly $27 million towards fees for Goldman Sachs that called for attention towards Buffet’s stand.

    Buffet, 91, had always shown his disdain for investment bankers whom he called costly “money-shufflers” who insist loudly to be fed in his annual letter in 2015. In 1996, Buffet, a director and shareholder of Gillette Co, had unsuccessfully tried to slash the fees of the bankers of the battery company Duracell International whom Gillette was acquiring.

    Representatives of Alleghany and Goldman refused to comment on the matter, whereas Buffet’s assistant did not respond to the message sent to him seeking his comment. 

    As per data compiled by Bloomberg Intelligence, the Alleghany transaction is the largest undertaken by Berkshire since 2016. Usually, deal prices see plenty of negotiations between buyers and sellers, but they typically smoothen out before the transaction is closed. Full announcements about the pricing do not contain clunky numbers as both parties agree on a plan on how the advisors’ fees have to be paid. 

    Buffet, who is nicknamed the Oracle of Omaha for his great investments, is famous for his business aphorisms that are also witty. He rarely used the services of an investment bank for his acquisition deals. Instead, He relied on Charlie Munger, the Vice Chairman of Berkshire’s earlier law firm Munger, Tolles, and Olson, to act as advisors.

    One of those rare bankers who won the respect of Buffet grudgingly was Byron Trott. As a former banker with Goldman Sachs, he helped Buffet close a deal to buy Mclane, a food distribution business, from Walmart.

    In a letter released by Buffet in 2004, he said that Trott understands Berkshire better than any other bankers on Wall Street, and he earns his fees. 

    The Buffet was a long-time investor in Goldman Sachs after acquiring warrants and stocks in the bank at the height of the financial crisis. Berkshire exited from all investments from the bank in 2020.


    RELATED ARTICLES

    Tesla’s Cheapest Cybertruck

    Tesla’s Cheapest Cybertruck Will Cost $60,990 in 2025

    Bloomberg News reports that after two years of delay and production glitches, Tesla Inc. has...
    JPMorgan’s S&P 500

    JPMorgan’s S&P 500 2024 Outlook Grimmest on Wall Street

    Bloomberg News reports that as the strategists on Wall Street are calling for an all-time...
    Fed Will Cut Interest Rates

    Fed Will Cut Interest Rates as Soon, Predicts Bill Ackman

    Bloomberg News reports that Bill Ackman, the billionaire investor, bets that the Federal Reserve will...
    AI Startup

    AI Startup of Google Raises $24 Million for Biotech Work

    Bloomberg News reports that the European biotech startup Cradle has raised as much as $24...
    Quantum Computing Lab

    Quantum Computing Lab Shut by Alibaba in Sign of Broader Cutback

    Bloomberg News reports that Alibaba Group Holding Ltd. has shuttered its quantum computing lab for...
    Water Damage Repairs

    Don’t DIY Water Damage Repairs to Your Business

    If your workplace ever suffers from water damage, you might be tempted to start fixing...
    MBA Programme

    Dual Degree MBA Programme: A Unique Educational Opportunity

    In today's world, professional success requires more than traditional management skills. It calls for a...
    women ipl

    Women IPL Sensation Shreyanka Patil: From Fan to Champion

    In a cricketing universe usually ruled by dudes, Shreyanka Patil, the rookie wonder for Royal...
    Monetize Magnet

    Monetize Magnet Review – The Best Crypto and Forex CPA Network

    In today's world, cryptocurrency has reached new heights, expanding continuously and providing online earning opportunities...
    celsius drink

    Celsius Drink – What Is It and How Safe Is It?

    These days, you must come across your social media feeds with an advertisement for a...
    low porosity hair

    Low Porosity Hair Problem? Slay Locks with Moisture Miracle

    Have you ever experienced your hair being stubbornly resistant to moisture? That's low porosity hair...