New York — In a private offering agreement, Berkshire Hathaway Inc., an Omaha, Neb.-based a conglomerate holding company offering property/casualty insurance, reinsurance and specialty nonstandard insurance, will invest $5 billion of perpetual preferred stock in The Goldman Sachs Group Inc., a New York-based bank holding company and a leading global investment banking, securities and investment management firm. The preferred stock has a dividend of 10%, and is callable at any time at a 10% premium. In conjunction with this offering, Berkshire Hathaway also will receive warrants to purchase $5 billion of common stock with a strike price of $115 per share, which are exercisable at any time for a five-year term.

“Goldman Sachs is an exceptional institution,” says Warren Buffett, chairman and CEO of Berkshire Hathaway Inc. “It has an unrivaled global franchise, a proven and deep management team and the intellectual and financial capital to continue its track record of out-performance.”

In addition, Goldman Sachs is raising at least $2.5 billion in common equity in a public offering.

“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,” says Lloyd Blankfein, chairman and CEO of Goldman Sachs. “We view it as a strong validation of our client franchise and future prospects. This investment will further bolster our strong capitalization and liquidity position.”

Source: Business Wire

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