Berkshire Hathaway to become Bank of America's top shareholder
Berkshire will take a roughly 7 percent ownership stake, worth about $17 billion based on Bank of America's closing price of $24.32 on Thursday.
It was made possible by Bank of America's June 28 decision to boost its quarterly dividend to 12 cents per share from 7.5 cents, after passing the Federal Reserve's latest "stress test" of its capacity to weather difficult markets.
Berkshire will exercise warrants to acquire the 700 million common shares when Charlotte, North Carolina-based Bank of America increases its dividend, expected in the third quarter.
It will swap the $5 billion of Bank of America preferred shares it bought in August 2011 for the common stock, in a cash-free exchange.
Berkshire is sitting on a roughly $12 billion paper profit, because Bank of America's stock price is more than triple the $7.14 exercise price for the warrants. ■