Berkshire Hathaway (
), the conglomerate owned by
, has become owner of 17% of Media General Inc. (
) through exercise of warrants ahead of their May 2020 expiration
date. The 4,646,220 warrants cost one cent each, and Buffett
traded them for shares priced at $4.92 on September 24, or a
total value of about $23 million.
Media General, a Berkshire Hathaway subsidiary, acquired the
majority of Media General's 62 papers for $142 million in cash in
May and lent the company $400 million to pay off debt, as well as
extended it a $45 million credit line. As part of the deal, he
acquired the 4.6 million warrants which at the time equaled 19.9%
of its shares outstanding. Berkshire also received the right to
nominate a director to Media General's board of directors.
The stock jumped 33% on announcement of the deal, and has gained
57% since then.
"In towns and cities where there is a strong sense of community,
there is no more important institution than the local paper,"
said Buffett. "The many locales served by the newspapers we are
acquiring fall firmly in this mold and we are delighted they have
found a permanent home with Berkshire Hathaway."
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