NEW YORK, September 23, 2008 (AFP) – Tycoon Warren Buffet’s Berkshire Hathaway has agreed to buy five billion dollars of stock in Goldman Sachs, and could double its stake within five years, the Wall Street bank said late Tuesday.
Under the terms of the agreement, Berkshire Hathaway is buying five billion dollars of perpetual preferred stock bearing a 10 percent annual interest rate, Goldman Sachs Group said in a statement.
Buffet, through his holding company, will have the option of buying five billion dollars of common stock priced at 115 dollars a share “at any time for a five-year term,” the company said.
Goldman Sachs, until Monday one of the last two major Wall Street investment banks, with Morgan Stanley, said it plans to raise “at least” 2.5 billion dollars in common equity in a public offering.
Goldman Sachs said it had struck the deal with Berkshire Hathaway “in a private 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. We view it as a strong validation of our client franchise and future prospects,” Lloyd Blankfein, Goldman chairman and