American billionaire investor Warren Buffett’s Berkshire Hathaway group, has become the largest shareholder of Bank of America Corp by exercising its right to acquire 700 million shares of the bank’s common stock at a bargain-basement price. more than tripling an investment it made six years ago.
Buffett’s 700 million shares cost him $5 billion to acquire, based on the deal terms set six years ago. The value of those shares at Tuesday’s close were roughly $16.5 billion, which translates into a tidy paper gain, or profit, of $11.5 billion,” UStoday report.”
After Tuesday’s market close, Bank of America announced the exercise of the warrants, which gave Berkshire the right to buy the bank’s shares for about $7.14 each shares closed down 14 cents at $23.58 Bank of America confirmed in a press release, a steep discount to the bank’s Tuesday’s closing price of $23.58. The purchase was made with preferred shares Berkshire acquired through its investment in the bank in August 2011.
The deal makes Berkshire a roughly 6.6 percent stake in the second-largest U.S. bank, based on an increase in the number of Bank of America shares outstanding, Reuters data show. (Reporting by Jonathan Stempel in New York; Editing by Dan Grebler)
Buffett’s investment is now worth $16.51 billion, meaning he has made a capital gain of nearly $12 billion.
Buffett’s other holdings include major assets in real estate and insurance. He is also the biggest shareholder in Wells Fargo.