* National Indemnity signs confidentiality agreement
* Transatlantic has deal to merge with Allied World
* Validus has made hostile bid for Transatlantic
(Adds background, byline)
By Paritosh Bansal
NEW YORK, Aug 12 Transatlantic Holdings Inc
TRH.N opened talks with a unit of Warren Buffett's Berkshire
Hathaway Inc (BRKa.N) on Friday over a $3.2 billion takeover
offer, adding a new twist in the battle for the reinsurer.
The Berkshire unit, National Indemnity, entered into a
confidentiality agreement with Transatlantic, according to
Transatlantic already has an all-stock $2.9 billion deal to
merge with Allied World Assurance Company Holdings Ltd (AWH.N).
It is also facing a hostile $2.9 billion cash-and-stock
takeover offer from Validus Holdings Ltd (VR.N).
Friday's move could force these other Transatlantic suitors
to sweeten their bids, and possibly unleash a bidding war for
the New York-based reinsurance company.
Allied World and Validus have both seen the value of their
bids fall, thanks to the stock in the purchase price.
The Validus bid, which at one point was nearly $400 million
better than the Allied offer, has lost all its premium, thanks
to adverse investor reaction to its bid and broader market
Transatlantic first entered into a deal with Allied World
in June, but its plans hit a hurdle when a month later Validus
came in with an offer of its own.
At the time each was made, the Allied World offer was worth
$3.2 billion and the Validus offer was worth $3.5 billion.
Earlier this month, as the values of Allied World's offer
fell, Buffett's lieutenant Ajit Jain jumped in with its $3.2
billion cash bid.
Transatlantic rejected Berkshire's offer as too low but
said the bid could lead to a superior proposal, and offered to
open talks if Berkshire signed a confidentiality agreement.
Transatlantic said on Friday the terms of the
confidentiality agreement with National Indemnity are
substantially similar to the terms of the agreement it entered
into with Allied World.
Notably, the agreement includes a standstill provision,
which had become a point of contention with Validus and led the
Bermuda reinsurer to take its bid directly to Transatlantic's
Validus sued Transatlantic on Thursday, but also offered
its own books for review in an effort to raise pressure on
Transatlantic to open talks with it. [ID:nN1E77A0WE]
(Reporting by Paritosh Bansal; editing by Carol Bishopric)