Berkshire Hathaway Inc. will buy $5 billion worth of perpetual preferred stock from Goldman Sachs Group Inc. in a private offering, Goldman Sachs announced Tuesday.

The preferred stock will pay a 10% dividend and will be callable any time at a 10% premium. Berkshire will also receive warrants to purchase $5 billion worth of common stock within five years and a strike price of $115 per share.

Along with Morgan Stanley, Goldman Sachs announced Sunday it would convert into a bank holding company.

"We are pleased that given our longstanding relationship, Warren Buffett, arguably the world's most admired and successful investor, has decided to make such a significant investment in Goldman Sachs. We view it as a strong validation of our client franchise and future prospects," Lloyd C. Blankfein, chairman and chief executive officer of Goldman Sachs Group Inc., said in a statement. "This investment will further bolster our strong capitalization and liquidity position."

"Goldman Sachs is an exceptional institution," Warren Buffett, chairman and CEO of Berkshire Hathaway, said in a statement. "It has an unrivaled global franchise, a proven and deep management team, and the intellectual and financial capital to continue its track record of outperformance."

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