Warren Buffet is on a deal making spree. Close on the heels of picking almost 10% stake in Goldman Sachs for $5 billion, Buffet is making a $3 billion investment in General Electric Co. (General Electric Company). Warren Buffett’s Berkshire Hathaway Inc. will subscribe to the perpetual preferred stock whichas a dividend of 10% and is callable after three years at a 10% premium.
In conjunction with this offering, Berkshire Hathaway will also receive warrants to purchase $3 billion of common stock with a strike price of $22.25 per share, which is exercisable at any time for a five-year term.
Goldman, Sachs & Co. is the bookrunner for the transaction. Banc of America Securities, LLC, Citi, Deutsche Bank Securities, J.P. Morgan and Morgan Stanley may be added as additional bookrunners.
Berkshire Hathaway Chairman and CEO Warren Buffett said, “GE is the symbol of American business to the world. I have been a friend and admirer of GE and its leaders for decades. They have strong global brands and businesses with which I am quite familiar. I am confident that GE will continue to be successful in the years to come.”
GE CEO Jeff Immelt said, “This action does two things for GE investors. First, it enhances our flexibility and allows us to execute on our liquidity plan even faster. Second, it gives us the opportunity to play offense in this market should conditions allow. In addition, we remain committed to the Triple A rating and in the recent market volatility, we continue to successfully meet our commercial paper needs.