Warren Buffett has bought 700 million shares of Bank of America at a significantly reduced price, gaining more than $11 billion. The move comes after his $5 billion investment in 2011 when the bank was floundering, which left him with the option to purchase discounted shares by 2021.
“I am impressed with the profit-generating abilities of the franchise and that they are acting aggressively to put their challenges behind them,” Buffett said at the time.
In a press release last week, Bank of America CEO Brian Moynihan stated:
“In 2011, we welcomed Berkshire Hathaway as a shareholder, and we appreciate their continued support now as our largest shareholder.”
The press release revealed that Buffett’s holding company Berkshire Hathaway had claimed its right to purchase the shares at $7.14 per share- a dramatically reduced price from the $23.58 closing price. This investment has made Buffett the Bank’s largest shareholder.
Buffett had indicated his intentions earlier this year by stating that he would act on his right to buy the shares if Bank of America successfully increased its annual dividend 44 cents or more by 2021. Since his initial investment in 2011, Bank of America’s stock has climbed 209%.