Berkshire Hathaway will receive Goldman Sachs common stock worth $2.1 billion today (October 1) through warrants acquired as part of an agreement signed in October 2008 during the financial crisis. Under the terms of that agreement, Berkshire had the right to buy about 43.5 million Goldman shares at an exercise price of $115 per share for $5 billion. Goldman announced an amended deal in March 2013 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 October 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 with a 3% stake in the bank.
Warren Buffett’s investment in 2008 included $5 billion in Goldman Sachs 10% preferred stock. Goldman repurchased the preferred shares from Berkshire at a premium in March 2011.
On September 10, 2013, Goldman Sachs became one of the 30 components of the Dow Jones Industrial Average.