Berkshire Hathaway passed on a golden opportunity to become the largest shareholder in Goldman Sachs Group Inc. Warren Buffett decided to take cash instead of stocks on profits earned from a 2008 grant.
Berkshire had warrants allowing it to buy 43.5 million common shares in the firm valued at US$115 per share. The redemption period is until October 1 but in an announcement by the companies, Berkshire would get stock equal to the difference of the average closing price ten trading days prior to Oct.1 and the actual redemption price multiplied by the total number of stocks stipulated in the warrants.
The amended deal would reduce the risks assumed by the investment icon, removing the need to raise US$5 billion to enforce the warrants as well as eventually selling the shares of stock in the market just to gain a profit.
Goldman reached out to Buffett to support its capital base and restore market confidence after the Sept 15, 2008 collapse of Lehman Brothers Holdings.
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