Berkshire Gets $260.7 Million GE Stake as Warrants Expire

Warren Buffett’s Berkshire Hathaway Inc. (BRK/A) is getting General Electric Co. (GE) stock worth $260.7 million after exercising warrants it received as part of an investment during the 2008 financial crisis.

Berkshire will get 10.7 million shares of the world’s largest maker of jet engines, medical scanners and diesel locomotives, according to a regulatory filing today from Fairfield, Connecticut-based GE.

The transaction marks a milestone in Chief Executive Officer Jeffrey Immelt’s recovery from damage suffered in the aftermath of Lehman Brothers Holdings Inc.’s collapse, including the loss of GE’s AAA credit rating and the first reduction of its dividend since 1938. The company in 2011 redeemed $3 billion in preferred stock it issued to Berkshire as part of the capital injection.

The billionaire and GE amended the agreement governing the warrants in January to allow a cashless transaction using the average closing price during a period of 20 trading days preceding the exchange to compute the payout. Omaha, Nebraska-based Berkshire passed on a chance to lay out $3 billion for shares at $22.25, while GE reduced the dilution for its shareholders.

GE climbed 0.7 percent to $24.36 today. The shares have declined 4.5 percent since Sept. 30, 2008, the day before Buffett’s investment was announced.

To contact the reporter on this story: Tim Catts in New York at tcatts1@bloomberg.net.

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net.

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