It’s an especially nice pay day for Warren Buffett.
Today Goldman Sachs will give him $US2 billion in cash and 13.1 million shares as The Oracle exercises warrants he bought during the financial crisis, says Bloomberg.
Back in 2008 when the world seemed like it was ending, Warren Buffett gave Goldman Sachs a capital injection. For his trouble, the bank gave Berkshire Hathaway warrants to buy 43.5 million Goldman Sachs common shares at $US115.
Here are the terms of the deal from a March 2013 Goldman Sachs press release:
The warrant had provided Berkshire Hathaway the right to purchase 43,478,260 shares of Goldman Sachs’ common stock, par value $US0.01 per share, at an exercise price of $US115 at any time until October 1, 2013. Under the amended agreement, Goldman Sachs will deliver to Berkshire Hathaway the number of shares of common stock equal in value to the difference between the average closing price over the 10 trading days preceding October 1, 2013 and the exercise price of $US115 multiplied by the number of shares of common stock covered by the warrant (43,478,260).
Just a fun fact about this: Buffett did his first transaction with Goldman over 50 years ago. He’s been meeting with the bank’s execs since 1940.