Toronto's Fairfax Financial, Switzerland's Allied World reach $4.9B deal

Toronto-based insurance company Fairfax Financial said Monday that it had reached a deal to acquire Switzerland-based property, casualty and specialty insurance and reinsurance firm Allied World Assurance in a cash-and-stock deal valued at $4.9 billion, including debt assumption.

The acquisition brings together two global insurance giants. Fairfax said Allied would operate within its portfolio "on a decentralized basis."

Fairfax said the deal equals $54 per share, or about 18% higher than Friday's closing price of Allied stock.

The companies said they expect the deal to close in the second quarter of 2017.

Fairfax CEO and Chairman Prem Watsa and a company he controls collectively wield about 43% of Fairfax shareholder votes and have supported the deal's financing.

Allied World stock traded in New York increased 11.3% to $50.92 in early trading Monday. Fairfax Financial shares traded in Toronto fell 4.1% to 588 Canadian dollars in early trading.

Follow Paste BN reporter Nathan Bomey on Twitter @NathanBomey.