Berkshire Hathaway will receive shares of the bank's perpetual preferred stock with a 10% dividend, as well as warrants for the
purchase of another $5 billion of Goldman's common stock with a strike
price of $115 each. The warrants are exercisable at any time for a five-year term.
Additionally, Goldman Sachs plans to raise at least $2.5 billion in
common equity in a public offering. Shares of Goldman closed at $125.05
and raced higher in after-market trading, gaining another 5.1% to
$131.50 on the news.
Goldman and Morgan Stanley abandoned the pure investment banking model
this week, applying to the Federal Reserve to become bank holding
companies. On Monday the Fed waived the normal five-day waiting period
to approve Goldman and Morgan Stanley's applications, making the change
effective immediately. - George White
See Goldman statement
See Crisis on Wall Street Dealwatch
Comments
The Oracle of Ohama is jumping into the banking sector as Berkshire Hathaway Inc. has agreed to invest $5 billion into Goldman Sachs Group Inc. through a private placement.
Who'd want to work for Goldman now?