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Watsa’s Fairfax Agrees to Buy Allied World for $4.9 Billion

  • $54 per-share, cash-and-stock offer amounts to 18% premium
  • Allied to keep its executive and senior management teams
Updated on

Fairfax Financial Holdings Ltd., the Canadian investment and insurance company, agreed to buy Allied World Assurance Co. for $4.9 billion in cash and stock in Chief Executive Officer Prem Watsa’s biggest purchase.

Fairfax will pay $54 per share, which is 18 percent higher than Allied’s closing price on Friday. For every share, Allied investors will receive about $10 in cash -- half from Fairfax and the rest from a pre-closing dividend by Allied -- as well as $44 of Fairfax’s stock, according to a statement late Sunday from the companies. Toronto-based Fairfax has the option to increase the cash portion by up to $30 per share and Watsa said Monday that he may take on equity partners, as he has done in prior deals.