Warren Buffett's Berkshire Hathaway Inc. will receive Goldman Sachs Inc stock worth nearly $2.15 billion on Tuesday through warrants acquired as part of a deal originally signed during the depths of the 2008 financial crisis.
Buffett received the warrants five years ago when his investment in Goldman was seen as a vote of confidence in the bank, which was reeling from turmoil in the credit market.
Under that deal, Berkshire had the right to buy about 43.5 million Goldman shares — or a roughly 9 percent stake then — at an exercise price of $115 per share, for $5 billion in total.
Goldman announced an amended deal in March that would give Berkshire a much smaller stake but would not require it to commit any capital to exercise the warrants.
Berkshire will convert the warrants into shares equal in value to the difference between the warrants' exercise price and the average closing price for Goldman shares in the 10 trading days up to Oct. 1.
Based on the last 10-day share price average of $164.38, Berkshire would be entitled to about 13.1 million Goldman shares, making it the sixth largest external investor in the bank, according to Thomson Reuters data.
Buffett's investment in 2008 cost Goldman dearly. In addition to the warrants, the bank had to give Berkshire preferred stock that paid dividends of $500 million a year, or about $15 a second. Goldman repurchased those shares from Buffett at a premium in March 2011.
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