Berkshire Hathaway Inc. (NYSE:BRK.A; BRK.B), controlled by chairman and CEO Warren Buffet and vice chairman Charles Munger, last night announced that it had completed the acquisition of 80% of Iscar Metalworking Companies (IMC) for $4 billion, reflecting a value of $5 billion for the company. The Wertheimer family will continue to own 20% of the company.
In a joint press release with Iscar Ltd., Berkshire Hathaway said, “IMC will continue to be managed by its current management team, including chairman Eitan Wertheimer and President and CEO Jacob Harpaz, as well as the rest of its current worldwide management team. IMC will remain headquartered in Tefen, Israel, and its worldwide business operations will continue as usual.”
Berkshire Hathaway first announced the acquisition during the company’s annual shareholders’ meeting in Omaha, Nebraska, in early May. Buffett said at the time, “We are delighted to partner with the Wertheimer family and IMC's current management, led by Eitan Wertheimer and Jacob Harpaz. As a truly international business, IMC is a top performer in its industry, with exposure to European, Asian and Latin American markets, as well as significant opportunities for growth as it continues to penetrate the North American market.”
Iscar, one of Israel’s biggest companies, was founded as a wholly private company and has never raised capital on the stock market. It has remained under the control of honorary chairman Stef Wertheimer since he founded the company over 30 years ago.
Iscar has 2,000 employees at its factory in the Galilee. The company has $1 billion in annual revenue, and its profit margin is estimated at 20-25%. As a private company, it does not disclose figures. Even now, after becoming part of the Berkshire Hathaway group, it will be hard to estimate Iscar’s performance, because Berkshire Hathaway published consolidated figures that will combine Iscar’s figures together with those from other subsidiaries.
With a personal fortune estimated at $42 billion, Buffett is the second richest man in the US, after Bill Gates. Through Berkshire Hathaway, he controls numerous US corporations, including Coca-Cola Company (NYSE: KO) and Wal-Mart Stores (NYSE: WMT). Since taking over Berkshire Hathaway in 1965, Buffett’s investment strategy has been to own long-term holdings. Last month, he announced that he would donate 80% of his fortune to charity, mostly to the foundation run by Bill and Melinda Gates.
Published by Globes [online], Israel business news - www.globes.co.il - on July 6, 2006
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