Skip to comments.Goldman Sachs to receive $5 billion Buffett investment (Berkshire Hathaway has $5B option for 5 yrs)
Posted on 09/23/2008 4:15:44 PM PDT by NormsRevenge
NEW YORK (Reuters) Goldman Sachs Group Inc (GS.N) on Tuesday said it will receive a $5 billion investment from Warren Buffett's Berkshire Hathaway Inc (BRKa.N) (BRKb.N), a vote of confidence for the Wall Street bank from perhaps the world's best-known investor.
Berkshire will buy $5 billion of perpetual preferred stock that carries a 10 percent dividend. It also will receive warrants to buy $5 billion of common stock at $115 per share, exercisable within five years.
Goldman also said it plans to sell at least $2.5 billion of common stock. It announced the offerings after earlier this week announcing it would become a bank holding company, enabling it to accept deposits, and killing the investment banking model that has dominated Wall Street for decades.
"This is a marriage of two incredibly intelligent, attractive partners," said Michael Holland, a money manager at Holland & Co in New York. "Buffett is saying about the top management of Goldman Sachs that they're distinct and different from their competitors. and it's a vote of confidence which is gold plated. You don't get better than this."
Shares of Goldman rose $10.65, or 8.5 percent, to $135.70 in after-hours trading following the announcement. They rose $4.27, or 3.5 percent, to $125.05 in regular trading.
"Goldman Sachs is an exceptional institution," Buffett said in a statement. "It has an unrivaled global franchise, a proven and deep management team and the intellectual and financial capital to continue its track record of outperformance."
(Excerpt) Read more at news.yahoo.com ...
” .. a vote of confidence which is gold plated. You don’t get better than this.”
It has been a breeder house for gubamint for years.
A good investment as things stand today.
The usual is happening. The smart vultures are cherry-picking the tasty bits left on the carcass, and Uncle Sugar will get to buy up the dead stuff that’s left with our tax money.
As a commercial bank, things will be different for Goldman. The tax-me-more, abortion promoting, off-the-rack-suit wearing oracle generally has good investment instincts however.
So, Berkshire gets a 10% dividend yield and 5 years of warrant coverage, and we get to pay a premium for their cr***y paper for which they have already collected underwriting fees. This “bailout” keeps looking worse and worse.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.