Transatlantic Holdings Inc. said Friday that it has entered into talks with a unit from Warren Buffett's Berkshire Hathaway Inc. that made a $3.25 billion offer to buy the insurer last week.
New York-based Transatlantic rejected the $52-per-share takeover bid from Berkshire's National Indemnity Co. after its board of directors determined the offer was not better than its current deal with Switzerland-based Allied World Assurance.
However, but because the bid might lead to a superior deal, the company agreed to talks with National Indemnity Co. and to exchange information.
Under the current deal between Transatlantic and Allied World Assurance Co., the two companies would combine in what they both call a merger of equals. Transatlantic shareholders would receive 0.88 of an Allied World share for each share they hold of Transatlantic.
Allied World CEO Scott Carmliani would head the combined company, and Transatlantic CEO Robert Orlich would retire.
Last month, Transatlantic rejected a hostile takeover bid from fellow insurer Validus Holdings Ltd. The board also adopted a one-year stockholder rights plan, commonly called a "poison pill," a move used to avoid hostile takeovers.
Transatlantic shares rose 57 cents, or 1 percent, to $50.70 in aftermarket trading. The stock fell 14 cents to end at $50.13 during the regular session.
Class B shares in Berkshire, based in Omaha, Neb., were unchanged in aftermarket trading. They slipped 22 cents to $71.52 during regular trading.