GE is planning a $12BN stock offering, and Warren Buffett is giving the company his very expensive seal of approval.
From the PR:
GE announced that it has reached agreement to sell $3 billion of perpetual preferred stock in a private offering to Berkshire Hathaway, Inc. The perpetual preferred stock has 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.
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.”
I think this is even sweeter than his GS deal. 10% dividend, 10% premium and $3BN more worth of shares at $22.25. Assuming their finance unit doesn’t manage to ruin the entire company this looks like a decent move on his part. It also gives GE a capital injection in non beg-from-the-government form, which is always nice to see these days.
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