Warren Buffett Invests $3 Billion In General Electric

October 1, 2008 4:39 p.m. EST

Fairfield, CT (AHN) - Reports surfaced Wednesday that Warren Buffett's Berkshire Hathaway will purchase $3 billion in GE preferred stock in a deal similar to the one they recently struck with Goldman Sachs.

Included in the terms, Berkshire will likely receive stocks warrants worth $3 billion that can be converted to GE shares at a price of $22.25 anytime over the next five years.

In addition to the Berkshire sales, GE said it will raise even more cash through a $12 billion common stock secondary offering.

"This action does two things for GE investors," said GE CEO Jeff Immelt in a statement, according to MarketWatch. "First, it enhances our flexibility and allows us to execute on our liquidity plan even faster. Second, it gives us the opportunity to play offense in this market should conditions allow."

The news helped lift GE shares of off Wednesday's lows as the stock was being pressured by earnings estimate cut by Deutsche Bank. The bank now expects GE to post 2008 earnings to be $2 a share, 9 percent less than their original estimates.

Shares of GE finished 3.7 percent lower, well off morning lows, at $24.50 a share.