EXHIBIT 8.1
[LETTERHEAD OF MUNGER, TOLLES & OLSON LLP]
August , 1998
Berkshire Hathaway Inc.
1440 Kiewit Plaza
Omaha, Nebraska 68131
Re: Combination of Berkshire Hathaway Inc. and General Re Corporation
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Ladies and Gentlemen:
In accordance with your request, we provide the following analysis and
opinion relating to certain federal income tax consequences of the transactions
(the "Transactions") whereby Berkshire Hathaway Inc. ("Berkshire") and General
Re Corporation ("General") will combine their businesses pursuant to the terms
and conditions set forth in that certain Agreement and Plan of Mergers dated as
of June 19, 1998 (the "Agreement"). Terms used herein but not defined herein
have the same meaning as in the Agreement.
In furtherance of the Transactions, Berkshire has formed a Delaware
corporation ("Holding Company"), which in turn has formed two wholly-owned
Delaware subsidiaries ("Merger Sub A" and "Merger Sub B") for the sole purpose
of effectuating the mergers described below. In addition, pursuant to the
Agreement, Berkshire has issued to General shares of a new class of non-voting,
non-participating cumulative preferred stock of Berkshire, and General has
issued to Berkshire shares of a new class of non-voting, non-participating
cumulative preferred stock of General.
If Berkshire and General are required under the Agreement to proceed
with the Transactions, and no Partial Cash Election has been made or can
properly be deemed to have been made by Berkshire, Merger Sub A will merge with
and into Berkshire and Merger Sub B will merge with and into General, in each
case in accordance with the Delaware General Corporation Law, with the result
that Holding Company will acquire through mergers, upon the terms and subject to
the conditions set forth in the Agreement, each share of General Common Stock
issued and outstanding immediately prior to the Effective Time and each share of
Berkshire Common Stock issued and outstanding immediately prior to the Effective
Time. Subject to the provisions of the Agreement, as a result of the Berkshire
Merger, each outstanding and issued share of Berkshire Common Stock shall be
converted into a share of a comparable class of Holding Company Common Stock
and, as a result of the General Merger, each outstanding and issued share of
General Common Stock shall be converted into either the right to receive 0.0035
of a share of Holding Company Class A Common Stock or 0.105 of a share of
Holding Company Class B Common Stock, as determined in accordance with the
election procedures set forth in the Agreement.
If Berkshire and General are required under the Agreement to proceed
with the Transactions, and Berkshire is permitted to and does in fact make, or
is deemed to have made, a Partial Cash Election, then in lieu of the transaction
described in the immediately preceding paragraph, the Berkshire Merger shall not
be consummated, Berkshire shall take any action required so that Merger Sub B is
a direct subsidiary of a direct subsidiary of Berkshire, Merger Sub B shall
merge with and into General pursuant to the Delaware General Corporation Law,
and the Merger Consideration shall consist of a combination of Berkshire Common
Shares and cash based on the formula, and pursuant to the election procedure,
set forth in the Agreement.
No fractional shares of Holding Company Common Stock shall be issued
in the Transactions, but instead fractional shares shall be converted to cash
under a formula in the Agreement.
Our analysis and the opinion set forth herein are based upon the facts
and terms as set forth in the Agreement and in the combined Proxy Statement of
Berkshire and General relating to the Transactions (the "Joint Proxy
Statement/Prospectus"), including in each case the exhibits thereto. Our opinion
is also based on certain representations in the Agreement, and certain written
representations to us from officers of Berkshire and General in certificates of
even date herewith. The facts and terms contained in the above-referenced
documents are incorporated herein by reference as the operative facts and terms
underlying the tax opinion set forth herein. We have assumed that any
representation or statement made "to the best knowledge" or similarly qualified
is correct without such qualification. As to all matters with respect to which a
person or entity making a representation referred to above has represented that
such person or entity either is not a party to, or does not
have, or is not aware of, any plan or intention, understanding or agreement, we
have assumed that there is in fact no such plan, intention, understanding, or
agreement. One of our key assumptions for purposes of this opinion is that the
facts and representations set forth in the above-referenced documents are true,
complete, correct and accurate on the date of this analysis and remain so to the
Effective Time. Any change or inaccuracy in such facts, representations or
assumptions may adversely affect our opinion. Additionally, our ability to give
the opinion set forth herein at the Effective Time is expressly conditioned upon
our receipt, as of the Effective Time, of certificates, in form and substance
reasonably satisfactory to us, comparable to those referred to in the second
sentence of this paragraph.
In rendering this opinion, we have examined such documents, laws,
regulations and other legal matters as we have considered necessary or
appropriate for purposes of the opinion expressed herein. We have not made any
independent investigation in rendering this opinion other than as described
herein.
Our opinion is based upon the Internal Revenue Code of 1986, as
amended as of the date hereof (the "Code"), and currently applicable Treasury
Regulations promulgated under the Code (including proposed Treasury Regulations,
except as otherwise indicated below), published administrative positions of the
Internal Revenue Service (the "IRS") in revenue rulings and revenue procedures,
and judicial decisions. Such legal authorities are all subject to change,
either prospectively or retroactively, and it is possible that changes in such
legal authorities may occur between the date hereof and the Effective Time. No
assurance can be provided as to the effect of any such change upon our opinion.
The opinion set forth herein has no binding effect on the IRS or the
courts. No assurance can be given that, if contested, a court would agree with
the opinion set forth herein. The opinion set forth herein represents rather
our best legal judgment as to the likely outcome of the issues addressed herein
if such issues were litigated.
On June 29, 1998, Berkshire and General filed a joint private letter
ruling request with the IRS requesting rulings corresponding to the three
Rulings (the 351(e) Ruling, the No Gain or Loss Ruling and the 368(c) Ruling)
specified in the Agreement, and in delivering our opinion we assume that the
facts and representations set forth in such request and any supplemental
submissions are true, complete and correct. No assurance can be given that the
Rulings, or any of them, will be issued in the form requested. In addition to
the other assumptions set forth herein, in delivering our opinion (1) set forth
below we assume that (i) either (A) Berkshire shall have received the 351(e)
Ruling and the No Gain or Loss Ruling or (B) the Proposed Regulations (as
defined in the Agreement) shall have been withdrawn and Berkshire shall have
received either the No Gain or Loss Ruling or the 368(c) Ruling and (ii) at the
Effective
Time, the stockholders of Berkshire and General will not be subject to one or
more binding commitments to transfer their Holding Company Common Stock received
in the Transactions that would cause such stockholders to fail to be in control
of Holding Company immediately after the Transactions within the meaning of
Section 351(a) of the Code.
In the case of transactions as complex as the Transactions, many
federal, state and local income and other tax consequences arise. We have been
asked only to address the issues specifically set forth below. No opinion is
expressed regarding any other issues.
This opinion is being delivered to you for use in connection with the
combined Proxy Statement of Berkshire and General relating to the Transactions
and may not be relied upon by any other person without our prior written
consent.
Subject to the foregoing, it is our opinion that, at the Effective
Time:
(1) if Berkshire and General are required under the Agreement to
proceed with the Transactions, and no Partial Cash Election has been
made or can properly be deemed to have been made by Berkshire, the
Berkshire Merger will be treated as a transfer of property to Holding
Company by the holders of Berkshire Common Stock governed by Section
351(a) or Section 351(b) of the Code; and
(2) if Berkshire and General are required under the Agreement to
proceed with the Transactions, and Berkshire is permitted to and does
in fact make, or is deemed to have made, a Partial Cash Election, the
Transactions will not qualify as a reorganization within the meaning
of Section 368 of the Code, the Merger Consideration will be taxable
to the stockholders of General, and the Transactions will not be a
taxable transaction to either Berkshire or its stockholders.
We hereby consent to the filing of this opinion with the Securities
and Exchange Commission as an exhibit to the Registration Statement on Form S-4
filed by Berkshire and Holding Company relating to the Transactions and to the
reference to us under the caption "The Transactions -- Federal Income Tax
Considerations" in the Joint Proxy Statement/Prospectus. In giving
such consent, we do not thereby admit that we are in the category of persons
whose consent is required under Section 7 of the Securities Act of 1933.
Very truly yours,