Buffett exercising option to buy Iscar outright

Warren Buffett's Berkshire Hathaway is paying $2 billion for the Wertheimer family's remaining 20% stake, doubling Iscar's valuation in seven years.

Warren Buffett is exercising his option to buy the remaining stake of the Wertheimer family in Israeli precision cutting tools company Iscar for $2.05 billion.

In May 2006, Buffett's Berkshire Hathaway bought 80% of IMC Group, in which Iscar is the main company, for $4 billion. At the time, this was the largest acquisition Buffett had ever made outside the US. It was also the largest ever acquisition of an Israeli company.

The original purchase valued Iscar at $5 billion, whereas the current deal values it at twice that.

“We are delighted to acquire the portion of the company that was retained by the Wertheimer family when IMC first became a member of the Berkshire group of companies. As you can surmise from the price we’re paying for the remaining interest, IMC has enjoyed very significant growth over the last seven years,” Buffett said.

Iscar makes precision carbide cutting tools. It is based in the Tefen industrial park in northern Israel, where it employs about 2,500 people, with another 7,500 employees around the world.

Iscar is a privately held company, and so financial details are not available, but its 2011 sales are estimated at about $3 billion. It is one of Israel's leading companies, and enjoys considerable benefits under the Law for the Encouragement of Capital Investment. It was founded by Stef Wertheimer as a small workshop in Naharia 61 years ago. Its current chairman is Wertheimer's son Eitan Wertheimer, and its CEO is Jacob Harpaz.

Published by Globes [online], Israel business news - www.globes-online.com - on May 1, 2013

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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