Warren Buffett To Invest $3B In GE, Similar Perks To His Goldman Deal

GE today announced plans to offer at least $12 billion of common stock to the public. The underwriters will have a 30-day option to purchase shares representing an additional 15%of the offering amount from GE to cover over allotments, if any. The offering is expected to be priced prior to tomorrow's market open in the U.S.

In addition, 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.

Read the full story here

-OR-

::HuffPost bloggers think this type of investment is a model for an alternative bailout ban
::Read about Buffett's Goldman Sachs deal and why analysts think neither that nor this Berkshire Hathaway GE deal is charity work.

Comments

[blist14]

warren buffet i have all his books

[OldKnute]

Oh,,, Like,,,, NO DUH!

GE is working on Hydroxy Technology. "Water Fuel"

Electric Fanjet Turbines,,,, Low-Head, Low-Volume, Hydro Electric Turbines, New Battery Technologies, Bio-Remediation.

GET IT!

Ford Aerospace is LOCKED UP with Geriatric Thinking,,,, What could save Ford, is teetering on the Auction Block.

GM is on its way down the tubes,, salesmen running R&D,,,, not engineers. Honda and Toyota leaving GM in a cloud of GREEN DUST.

America has just passed the largest TAX CUT in American HISTORY,,, in the hidden ATM clause of the Wall Street Bailout after Banks held the WORLD hostage with Spin, FEAR and SMEAR.

What do you want from Warren Buffett?

Sit on his RUMP,, while ALL American Industry folds?

He just looked around,,, AS ALWAYS,,,, and made the most wise and prudent pick he could.

A progressive and well-healed and managed Company, that can take the WORLD GREEN.

NO DUH!

All the best

Knute Neo-LIB

[dgscol]

Warren does a good Jonathan Winters impression.

[dgscol]

Warren sees GE ridding itself of all the bad securities. Too bad, but their chances of actually doing that are slim.

[KillTheMessenger]

GE is too large to let fail and it operates in markets that are important to national security. WB knows that. And he has given them time to ride out the storm. Then he comes in and takes his gold home.

:-)

[mero909]

Do you blame him? I just wish the government would bail me out too while they're giving away $700 billion.

[silke1]

I would bet that this man did not have a single dime invested in subprime loans. Because he is a shrewd investor. He knows how to create a lean and profitable operation.

You know who invested billions of goldman sacs money in subprime? Take a wild guess.
The fox who is now buying the henhouse.

Wake up America.

[blueskybigstar]

Is Buffet getting into the media industry? If so, find a way to put Murdoch out of business.

[Ironquill]

Buffet nearly drooled on himself when he said he'd like to buy into the bailout, buyiing assets at "market" and then selling them after the dust settles. I don't remember whether that was before the change in the "mark to market" rule, which I gather, now favors the seller more than before. The folks on "Fast Money", the only show I watch on CNBC, have for days been pushing the idea of a transparent marketing exchange for these assets. My guess is that there will be so much time delay before any information is divulged on the purchase and sale of these assets by the government, that it will be impossible for the public to monitor the transactions. I'd liked to be proved wrong.

[KillTheMessenger]

The problem with your argument is that except for people like Warren Buffet there is no market for these assets. If he and people like him don't not buy them, nobody else will. And if your government buys them, it will be for your taxpayer money. And please be assured that where Mr. Buffet will be able to make a nice profit, your government will manage to make a near hundred percent loss. Why? Because the man knows how to make money and government officials who have never done these transactions in their life before don't.

To let the government interfere in the markets for junk is like letting Dopey figure out the nuclear physics for the reactor next to your neighborhood.

[Ironquill]

I agree that the government will not only screw it up, but because of lack of transparency eventual buyers of these assets will make a fortune while the tax payer gets zilch.
The idea was that of a transparent exchange for investors like Buffet who will buy and sell this junk. The bigger problem is that if anyone does the math on how much junk is out there, we'd all be running for cover. I am startled that GE needs capital.

[LeonFreilich]

NEED TO LEAD

Wall Street's thrown the economy for a loss:

Bloomberg for mayor, Buffet for recovery boss.

[Mike169]

I wish he'd invest $3 billion in me.

[bored2tears]

Here's hoping Berkshire Hathaway's investment in GE is as successful as was TPG's in WaMu. Buffet bought in way too early on this one.

But at least he struck a better deal than GE's common shareholders, who are stuck with a dividend lower than the rate of inflation.

[KillTheMessenger]

I don't think one can compare the two deals at all. TPG is a highly successful aggressive investor, Buffet is probably as cautious as one can be. And the deal terms clearly reflect that. He will make money, no matter what happens. GE common stock holders will pay for his earnings.

And no, GE is not going to go broke. They serve a very different kind of customer than WaMu did. And they are "too large to fail", too.

[CFAmick]

Is GE Capital that desperate for money?

[nomadicexpat]

iin case you didnt notice, EVERYONE is desperate for money. we're in a liquidity crunch and if the largest insurer in the country can be nationalized absolutely no one is safe

PASS THE BILL

[WIpatriot]

Have cash, will buy failing companies....

[KillTheMessenger]

:-)

[KillTheMessenger]

Not desperate but operating cautiously. They are limiting the flow of outgoing moneys right now. Which, unlike banks, they can. The types of industrial and commercial loan contracts they service is very different from home loans and the different crazy derivatives that have proliferated around them.

[iambusto]

I read somewhere (cant confirm) that GE had a large amount of commercial paper coming due and since the commercial paper market is dead in short term there was no way they could "roll it over". thats why they are that desperate.

AAA company like GE paying 10% on preferred. what are main street retailers going to do :)

but hey, i am just a fearmonger.

[cafemocha]

I would LOVE to have Warren Buffet lobby congress on the behalf of the American taxpayer to redo this bailout legislation. Hire Buffet to work for the people. Give him a piece of the profit that he would negotiate for the taxpayer, and I bet he would give us a great deal. much better than what we see thus far. We'd make money, he'd make money, and credit would be flowing to the needy businesses. he'd have to dump his stakes in Goldman, GE, and other conflicts of interest before starting the negotiations

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[ajax2]

Warren Buffett gave a comprehensive review of the bail-out and why he's for it on PBS Charlie Rose tonight. I agree with everything he said. He said that the bail-out will work but the U.S. Treasury must pay market prices for the bad assets (he repeated this a few times), not some price that they might be worth down the road, but their worth right now. He's confident and optimistic that will happen, and that's where I disagree. I just can't see politicians not taking a buck back for themselves for inflating prices. His trust in this group of politicians disturbs me.

[KillTheMessenger]

There is no market price for things nobody wants to buy. That alone will make a lot of this a crap shoot.

[Mattjoe]

Find out what Warren knows already!!!
Gun to America"s head.
http://www.youtube.com/watch?v=GqIFoBXGizc

[KillTheMessenger]

If it's on youtube, it must be true.

:-)

[WIpatriot]

Doesn't mean it isn't, either.