Goldman Going Shopping?

Did Goldman Sachs (GS) need to raise $7.5 billion for survival? No. It did if it wanted to go shopping for deposits though…

Berkshire Hathaway (BRK.A) is buying $5 billion of perpetual preferred stock with a 10% coupon, as well as warrants that give it the right to buy $5 billion of common stock during next five years for $115, 8% below Goldman’s closing stock price Tuesday.

Goldman also announced it will sell sell at least $2.5 billion of common stock to the public. That ought to give Goldman $7.5 billion in fresh capital immediately.

This comes almost immediately after it “Bank Holding Company” status as granted by the Fed.

Why? Debt for an acquisition would be very hard for Goldman to come by so raising funds this way is it best option. With Wells Fargo (WFC), JP Morgan (JPM) and now TD Bank (TD) all rumored to be sniffing around Washington Mutual (WM) and Wachovia (WB) and Morgan Stanley (MS) in perpetual merger status, Goldman must be feeling at risk of losing out on some cheap assets.

Will Goldman go it alone? Doubtful but even as part of group, Goldman needed cash to get a deal done. Now they have it.

Disclosure (“none” means no position):Long GS, WFC, WB, none
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