Goldman Buying Out Warren Buffett’s $5 bln Stake

Goldman Sachs (GS) said it plans to buy back the preferred stock that Warren Buffett’s Berkshire Hathaway (BRK.A) (BRK.B) owns in the Wall Street firm.

The company announced that the Federal Reserve has concluded that it has no objection to Goldman Sachs’ proposed 2011 capital actions, which include the redemption in full of the 50,000 shares of the Company’s 10% Cumulative Perpetual Preferred Stock, Series G held by Berkshire Hathaway (BRK.A), the repurchase of outstanding common stock and a potential increase in our quarterly common stock dividend.

The redemption includes a one-time preferred dividend of approximately $1.64 billion which will be reflected in the Company’s first quarter results. This is expected to reduce reported diluted earnings per common share for the first quarter by approximately $2.80 per share. The redemption also results in the acceleration of $24 million of preferred dividends that are payable from April 1 to the redemption date, which will reduce reported diluted earnings per common share for the first quarter by approximately $0.04. While the Preferred Shares were outstanding, the Company incurred a dividend expense of $125 million per quarter, or $500 million annually, which reduced diluted earnings per common share by $0.85 in 2010.

The announcement comes after the Fed made sure that Goldman, the fifth-biggest U.S. bank by assets, and other banks are healthy enough to boost capital returns to shareholders.

Goldman, based in New York, gained $3.90, or 2.50 percent, to $159.65 at 1:55 p.m. New York time in NYSE trading. Earlier, it rose as high as $160.25. Berkshire, based in Omaha, Nebraska, rose $1,600.00 to $125,625.00 on the New York Stock Exchange.

Disclaimer: This page contains affiliate links. If you choose to make a purchase after clicking a link, we may receive a commission at no additional cost to you. Thank you for your support!

Be the first to comment

Leave a Reply

Your email address will not be published.


*

This site uses Akismet to reduce spam. Learn how your comment data is processed.