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BW: Berkshire Hathaway and White Mountain Will Not Sell Symetra after IPO

January 06, 2010 | About:

(GuruFocus, January 6, 2009) Back in October, 2009, we reported that after the IPO of Symetra Financial Corp, Berkshire Hathaway (BRK-B) and White Mountain Insurance Group (NYSE:WTM) may sell their stake in the company. (Symetra IPO: If Berkshire Hathaway And White Mountains Insurance Group Are Selling, Who Will Be Buying?). Their intention of selling shares makes it difficult for other institutional investor to buy the stock at the IPO.

Whatever Berkshire buys, other investors tend to follow. Same is true for whatever he sells.

Well, the IPO may be imminent: The Symetra IPO might become the first US IPO this year, but both Berkshire and White Mountain have pledged not to sell their shares for this year. According to this Business.com write-up.

Berkshire and White Mountain each owns 26% of Symetra shares prior to the IPO. They acquired the shares when they lead a consortium that took Symetra private in 2004 from Safeco.

Details of the IPS are as follows, according the Businessweek article:

1. The insurer plans to raise as much as $434.7 million in an initial public offering of 31 million shares, today’s filing said. The target figure was scaled back from a planned sale of as much as $575 million that had been listed in a Dec. 29 registration statement.

2. Symetra estimated it would have a so-called tangible book value, a measure of shareholder equity that excludes assets that can’t be sold in liquidation, of $12.42 a share after the offering and assuming an IPO price of $13.

3. At that share price, Symetra would be valued at 1.05 times tangible book value, a premium to the median of 0.97 for 24 life insurers traded in the U.S.
Soon Berkshire Hathaway will have a traded Symetra stock in its portfolio.

Rating: 3.3/5 (9 votes)


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