Investing.com - Warren Buffett's Berkshire Hathaway (NYSE:BRKa) confirmed Friday that it would exercise warrants to buy 700 million shares of Bank of America common stock after the Federal Reserve approved the bank's plans to hike its dividend by 60% to $0.48.
The warrants which were set to expire in 2021 allowed Buffett to switch $5 billion in preferred stock to common shares at a price of $7.14 per share.
The price tag is approximately 71% below Thursday's closing price of $24.32, netting Berkshire Hathaway a little over $12 billion in profit on the transaction.
Berkshire received the warrants to buy the common stock when it bought the preferred stock on Aug. 25, 2011 in a sale while Bank of America was fretting over its capital needs.
The purchase will make Berkshire the bank's leading shareholder, surpassing BlackRock, Vanguard and State Street.
Shares of Bank of America (NYSE:BAC) traded 0.80% higher to $24.52 in pre-market trade Friday.
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