American conglomerate General Electric Co. announced that it plans to raise $15 billion through the sale of shares to strengthen liquidity and the potential for new acquisitions during a period marked by intense market turmoil.
Among the buyers of GE’s shares is the corporation Berkshire Hathaway, owned by American tycoon Warren Buffett, which has invested $3 billion in GE. This marks Buffett’s second-largest strategic investment in the struggling financial sector in as many weeks, following last week’s announcement of a $5 billion investment in investment bank Goldman Sachs. "GE is a symbol of American industry," Buffett said. "I am confident that it will continue to be successful in the years to come." Berkshire is purchasing $3 billion worth of preferred shares that carry a dividend of up to 10%, along with an additional option to purchase another $3 billion worth of common shares at a price of $22.25 per share – slightly above their lowest level last week of $22.19 per share in the past 52 weeks.
General Electric, headquartered in Fairfield, Connecticut, has a market capitalization of $245 billion, making it the second most valuable American company whose shares are traded on the stock exchange. The company confirmed last week’s forecast of a profit decline in 2008 of as much as 12%. "The economic environment remains volatile," said CEO Jeff Immelt. According to him, the sale of shares will provide the company with greater flexibility and enable new acquisitions. Investors have interpreted this decision as a signal that GE is seeking to further protect itself from the most severe financial crisis threatening the U.S. since the Great Depression, and they emphasize that the fact that a company like General Electric feels the need to raise additional cash shows how shaken the market is. (H)
