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Acquisition   $10 in cash and $44 in Fairfax stock

Fairfax Financial to buy Allied World for $4.9 billion

Allied WorldFairfax Financial Holdings of Toronto will buy Swiss insurer Allied World Assurance Company Holdings for $4.9 billion in cash and stock.

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Fairfax will pay owners of Allied World $54 per share - $10 in cash and $44 in Fairfax stock. The offer amounts to an 18 percent premium above Allied World's Friday closing price of $45.77, their news release said.

The merger would create a leader in property and casualty insurance, reinsurance and investments, the release said. Boards of directors of both companies approved the deal.

Allied World would operate "on a decentralized basis" within the Fairfax group, Prem Watsa, chief executive of Fairfax, said in the release.

Fairfax said it expected to close the deal in the second quarter of 2017.

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