Billionaire investor Warren Buffett's Berkshire Hathaway (BRK) reveled Wednesday that it is investing $3 billion in General Electric Co. (GE), with Buffett expressing optimism that congress will pass a bailout of the financial industry and prevent a more severe economic crisis.
Berkshire Hathaway will acquire $3 billion in GE perpetual preferred stock, which has a dividend of 10% and is callable after three years at a 10% premium.
"Frankly these markets are offering opportunities that weren't available six months or a year ago," Buffett said on CNBC. "So we're putting money to work."
Along with the preferred stock, Berkshire Hathaway will also receive warrants to purchase $3 billion of GE common stock at a strike price of $22.25 per share over the next five years.
"GE is the symbol of American business to the world," Buffett said in a news release. "I have been a friend and admirer of GE and its leaders for decades. They have strong global brands and businesses with which I am quite familiar. I am confident that GE will continue to be successful in the years to come."
GE also said it would commence a stock offering to sell about $12 billion worth of its shares to the public as part of the company's efforts to accelerate the execution of its liquidity plan. The company said it expects to sustain its Triple A credit rating.
Underwriters of the offering have been given a 30-day option to purchase shares representing an additional 15% of the offering amount to cover over allotments.
Jeff Immelt, GE CEO, commented, "The economic environment remains volatile. However, the company's performance remains on track with the earnings guidance we provided last week for 2008, including third quarter financial services earnings of approximately $2 billion and industrial earnings growth of between 10 and 15 percent, excluding our Consumer & Industrial business."
The bookrunner for the public offering is Goldman Sachs, while Banc of America Securities, Citi, Deutsche Bank Securities, J.P. Morgan and Morgan Stanley are expected to join as additional bookrunners.
In late September, Warren Buffett agreed to invest about $5 billion in Goldman Sachs Group Inc. (GS), which recently changed its status to a bank holding company from an investment bank. The transaction would involve the purchase of Goldman Sachs' perpetual preferred stock in a private offering.
Last week, GE revealed plans to suspend its share buy back program and lowered its third-quarter and full-year earnings guidance, reflecting the continuing Wall Street turmoil that market experts call the worst since the Great Depression.
As part of its efforts to maintain its Triple A rating, the company announced a reduction in the dividend that GE Capital pays to the parent to 10% from 40%. However, the company said it would continue its quarterly dividend of $0.31 per share through 2009 end.
On Monday, GE Consumer & Industrial, a unit of GE, announced the sale of its Warranty Management Group business to insurance company Assurant Inc. (AIZ) for $140 million in cash plus the transfer of certain assets and the assumption of certain liabilities.
Shares of GE are currently trading at $24.41, down $1.09 or 4.27%, on a volume of about 163 million. The stock has been moving in a range of $22.16 to $42.15 for the past year, with a three-month average volume of about 70 million shares.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.