Billionaire Warren Buffett's Berkshire Hathaway will invest $5 billion in the investment bank Goldman Sachs as part of the bank’s efforts to raise $7.5 billion in fresh capital, a Goldman spokesman said Tuesday.
In return, Berkshire will receive perpetual preferred shares in GoldmanThe preferred stock will pay a 10 percent dividend.
In addition, Berkshire Hathaway will receive warrants to buy $5 billion in common stock at a strike price of $115 a share, which are exercisable at any time in a five-year period. Goldman shares closed Tuesday at $125.05, up $4.27.
Goldman will also issue to the general public $2.5 billion in common shares.
"We are pleased that given our longstanding relationship, Warren Buffett, arguably the world’s most admired and successful investor, has decided to make such a significant investment in Goldman Sachs,” Mr. Blankfein said. “We view it as a strong validation of our client franchise and future prospects.”
Mr. Buffett, also in the statement, called Goldman Sachs an exceptional institution.
“It has an unrivaled global franchise,” Mr. Buffett said, “a proven and deep management team and the intellectual and financial capital to continue its track record of outperformance.”
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