Warren Buffett's Berkshire Hathaway Inc. will acquire a 16 percent stake in the outstanding common shares of White Mountains Insurance Group, Ltd., a Bermuda-based insurance holding company that has its principal executive office in Hanover.
White Mountains announced last week that Berkshire Hathaway, a Nebraska-based conglomerate headed by the billionaire financier Buffett, will execute all of its warrants to purchase 1,724,000 common shares of White Mountains stock for approximately $294 million in cash.
Berkshire Hathaway obtained the warrants when it financed White Mountains' acquisition of OneBeacon Insurance Group LLC, a group of independent insurance agents in the Northeast, in June 2001.
Because Berkshire Hathaway exercised its warrants before they were callable by White Mountains on May 31, 2005, the two companies agreed to discount the exercise price by about two percent. The discount will have a marginal effect on the tangible book value per share of White Mountains stock.
"We are pleased that Warren Buffett has agreed to exercise the warrants a year ahead of schedule for a modest discount," said White Mountains President and CEO Ray Barrette in a statement released by the company.
White Mountains plans to take advantage of "many opportunities to put this capital to work for the benefit of all shareholders," Barrette said.
Berkshire Hathaway, which has multiplied over 1000 times in value since 1976, owns a variety of companies, including paint manufacturer Benjamin Moore and Co., Borsheim's Fine Jewelry, apparel maker Fruit of the Loom and auto insurer GEICO.
White Mountains holds companies involved in property and casualty insurance and reinsurance, and recently co-led an investor group with Berkshire to purchase the insurer and investment outfit Safeco Corporation for approximately $1.35 billion.
After the announcement last Wednesday, Berkshire Class "A" shares gained $790 to close at $87,900, and White Mountains stock increased 99 cents to $502.99. Both stocks trade on the New York Stock Exchange.
