Warren Buffet just disclosed his largest deal since 2016

Warren Buffet is buying Alleghany Corporation (NYSE: Y) for $11.60 billion – an announcement that sent shares of the insurance company up 25% on Monday.

A 25% premium for Alleghany shareholders

The $848.02 a share cash deal represents a 25% premium for Alleghany stockholders. Buffet will execute the transaction via his conglomerate holding company Berkshire Hathaway Inc (NYSE: BRK.A) that’s sitting on $144 billion in cash.

Alleghany will be the largest acquisition for Berkshire since 2016, when it bought Precision Castparts for $37 billion. According to Alleghany CEO Joseph Brandon said:

Jim Cramer reacts to the announcement

Alleghany and its businesses will operate independently upon completion of the acquisition, expected in the fourth quarter of 2022. Commenting on the news, CNBC’s Jim Cramer said on “Squawk on the Street”:

The announcement comes only days after Berkshire stock hit a record high. Insurance is one of Buffet’s favourite businesses; he already owns notable names in this space, including General Re and Geico.