Wesco Financial (NYSE:WSC) Shares soared on the news Warren Buffett, via Berkshire Hathaway (NYSE:BRK-A), would be acquiring the remaining shares in the company they don't own, according to an SEC filing.
The remaining amount of the shares not owned by Berkshire were 19.9 percent.
Terms of the deal proposed by Berkshire t Wesco were for an "+exchange for Berkshire Class B shares and/or cash valued at the book value per share of Wesco as of a time reasonably contemporaneous with the closing of such a transaction."
Berkshire is attempting to structure the deal in such a way as to not make it a taxable event for Wesco shareholders.
The deal will only go forward if the Board of Directors of both companies give their approval, along with a majority vote by remaining Wesco shares if a meeting is called for that purpose.
If the deal isn't approved, Wesco will continue to operate as a 80.1%-owned subsidiary of Berkshire.
1 comment:
I read that Berkshire would use its Class B stock to pay Wesco shareholders who elect to take Berkshire stock. In my view, since Berkshire is offering "undervalued" BRK-B shares to pay for Wesco's stock at "a price around book value per share" this might be a more valuable deal than it looks on the surface.
Yes, "a deal more valuable than it first appears."
Thinking of "intrinsic value," It is my opinion that BRK shares ( my estimate of Intrinsic value for A shares is around 180K/brk-a ) are more undervalued than WSC shares; therefore, in reality WSC shareholders would be receiving around $353 + $116 in value ( think 33% discount or premium ) for a total of around $468 in value per share. In my view, those who take the deal will be rewarded and those who cash out will receive book value.
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