Berkshire Hathaway buys Bank of America stock, sees $11.7B profit

June 30 (UPI) -- Berkshire Hathaway Inc. will be Bank of America's largest stockholder and will receive a profit after announcing Friday it plans to purchase 700 million shares.

Berkshire will use its $5 billion in Bank of America preferred stock to purchase the common stock at $7.14 per share, well below its closing price of $24.32 per share. The preferred stock was bought in 2011; it came with a 6 percent annual dividend and a warrant allowing Berkshire to buy the common stock at $7.14 per share.

The preferred stock purchase means $300 million annually in dividends to Berkshire and its chairman, Warren Buffett. The purchase of common stock at a discount means a profit, on paper, of $11.7 billion.

The stock dividend also rose from 38 cents to 44 cents per share after Bank of America passed the second of two annual stress tests administered by the Federal Reserve and received approval to increase the dividend.