by havanagilla » Sat May 06, 2006 6:39 pm
<br><!--EZCODE LINK START--><a href="http://www.haaretz.com/hasen/spages/712876.html" target="top">Warren Buffett (Reuters</a><!--EZCODE LINK END-->)<br> <br> <br><br>Last update - 00:06 07/05/2006 <br> <br> <br>Warren Buffett to acquire Israeli firm for $4 billion <br> <br>By Guy Rolnik, Moti Bassok, and Aluf Benn, Haaretz Correspondents, and AP <br> <br>In what is perceived to be a vote of confidence in the Israeli economy by one of the world's wealthiest entrepeneurs, billionaire investor Warren Buffett is acquiring 80 percent in Iscar Metalworking Companies, a property of the Wertheimer family, for $4 billion in cash. The move represents Buffett's first major acquisition of a company outside of the United States. <br><br>The deal, which illustrates Iscar's net worth to be near $5 billion, puts Stef and Eitan Wertheimer at the top of the list of Israel's richest families.<br><br>Eitan Wertheimer told Israeli reporters in Omaha, Nebraska, where the deal was signed, that he updated Prime Minister Ehud Olmert and Finance Minister Avraham Hirchson on the progress of negotiations that lasted several months.<br><br><br> <br> <br> Advertisement <br> <br>"This deal is a certificate of honor for the Israeli economy," Eitan Wertheimer said. "Other big-time investors will come in the wake of Buffet."<br><br>(Analysis: Warren Buffett's ultimate expression of trust in Israel's economy) <br><br>Iscar is a private company which manufactures advanced knives and cutting tools and is internationally renowned for its line of milling and turning products. The company's factories are situated in the Tefen industrial zone in the Galilee which was founded by Stef Wertheimer. <br><br>Iscar also owns and operates factories in countries around the world.<br><br>Buffett, who is chairman and chief executive officer of the investment firm Berkshire Hathaway, believes in the quality of Iscar's management team, all of whose members are expected to remain in their posts, including President and Chief Executive Officer Jacob Harpaz, a press release said.<br><br>When asked if Israel's tenuous geopolitical state served to dissuade him from going through with the deal, Buffett replied: "There's a danger anywhere in the world. We found that out with the World Trade Center."<br><br>Buffett told Israel Radio that he believes in the State of Israel, and that he decided to purchase the controlling interest in Iscar due to the high quality of employees.<br><br>Eitan Wertheimer, the son of the company's founder Stef Wertheimer and who is credited with leading it to new heights of success, will also remain with Iscar in his capacity as chairman of the board.<br><br>"This is great news and a huge gift to the State of Israel," Prime Minister Ehud Olmert told Eitan Wertheimer on Saturday. "We tip our hats to you, both personally and on behalf of the entire state."<br><br>"This sale is a great momentum boost for the economy and I'm sure that it will bring additional economic benefit," Olmert said.<br><br>Wertheimer thanked the prime minister, saying "Warren Buffett's vote of confidence represents an important declaration for the state, and <!--EZCODE BOLD START--><strong>just as they spoke about the Balfour Declaration until now, they will mention the Buffett declaration."</strong><!--EZCODE BOLD END--><br>Olmert plans on making contact with Buffett during the afternoon Sunday.<br><br>Buffett's fortune ranks him as the second wealthiest person in the world behind Microsoft founder Bill Gates. He is also considered to be the most talented investor on the globe.<br><br>Buffett and Eitan Wertheimer will make a joint appearance Saturday before an audience of close to 25,000 who have gathered for Buffett's annual investors conference in his hometown of Omaha, Nebraska.<br><br>The conference - which brings together tens of thousands of would-be investors, including Berkshire Hathaway stockholders - is thought to be one of the year's most anticipated business events of the year.<br><br>Patrons flock for a rare opportunity to hear Buffett, who is not wont to appear in public, in the hope to receive sound investment advice from the reclusive billionaire.<br><br>Hotels in Omaha are fully booked for this weekend as visitors, who have given the conference the moniker "<!--EZCODE BOLD START--><strong>capitalism's Woodstock,"</strong><!--EZCODE BOLD END--> reserved rooms many weeks in advance.<br><br>In his statements, Buffett is expected to express his confidence in the Israeli economy.<br><br>Investors all over the world closely follow the progress of companies in which Buffett invests as well as his statements and opinions regarding long-term global economic projections and analysis.<br><br>Nicknamed "the Oracle of Omaha," has for years stuck to his prediction that the dollar would weaken. Buffett even made a significant investment in the steel market - silver, that is. <br><br>In 1998, Buffett purchased 129.7 million ounces of silver at six dollars an ounce. Two weeks ago, the price of silver reached a 23-year high of 14.68 dollars per ounce.<br><br>Although Berkshire Hathaway stocks have significantly risen since Buffett took the reins of the company in 1965, it has lagged behind the S&P 500 since February 2004.<br><br>Berkshire already owns a diverse mix of more than 60 companies, including insurance, reinsurance, carpet, jewelry, furniture, restaurants and utility firms. And it has major investments in such companies as H&R Block Inc., Anheuser-Busch Cos. and Coca-Cola Co.<br><br>Conversely, Iscar's investments are far less known even in Israel given that the company is privately owned and does not sell its shares on any stock exchange. In addition, the Wertheimer family is tight-lipped on all matters relating to their finances.<br><br>Iscar manufactures tools for slicing metal which are used by companies which employ computerized lathing methods. Iscar is thought to be a world leader in the field.<br><br>Israeli analysts believe Iscar earns over $500 million per year. The company's sales reached over $1 billion in 2005 and analysts anticipate figures for the coming year showing an increase.<br><br>In recent years, speculation has persisted that Iscar would begin selling its shares on the New York Stock Exchange. That scenario, however, has yet to unfold.<br><br>What began 30 years ago as a modest welding shop in Nahariya headed by Stef Wertheimer has become a profitable venture for many years running. In the early 1990s, IDB Holdings purchased a 25 percent minority stake in the company. As a result, the company's financial results have since been revealed.<br><br>Although the numbers demonstrated Iscar's extraordinary profitability, the Wertheimer family aimed to reacquire the 25 percent share sold to IDB so that its earnings could remain out of public view. IDB, which was then owned by the Recanati family and under the management of Dov Tadmor, refused, triggering a bitter feud between the two giants.<br><br>In an extraordinarily shrewd financial move, Eitan Wertheimer began buying up large amounts of IDB stock as a means of putting pressure on IDB's holding company. The move paid off, and IDB sold back the 25 percent to the Wertheimers.<br><br>To add insult to injury, the state subsequently sued Tadmor and IDB executives for concealing information from the public in presenting Iscar reports as "IDB reports." Even though Tadmor was convicted and sentenced to community service, his conviction was overturned by an appeals court.<br><br>As a result of the buyback, the Wertheimer family regained 100 percent controlling interest in Iscar. Over the course of the last decade, Iscar has continued its rapid growth thanks to the expansion of the global economy as well as the demand for sophisticated lathing machinery and, by extension, cutting tools of the kind Iscar manufactures.<br><br>Iscar's high profitability and the Wertheimer's 100 percent stake have made Stef and his son Eitan one of the richest families in Israel. Eitan Wertheimer is near the top of TheMarker's 500 richest Israelis list with a fortune estimated at billions of dollars.<br><br>The sale of the company to Buffett is expected to catapult the Wertheimer's to the top of the list.<br><br>"We are delighted to partner with the Wertheimer family and IMC's current management, led by Eitan Wertheimer and Jacob Harpaz," Buffett said in a press release issued to the media early Saturday. "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." <br><br>"My partner, Charlie Munger, and I have been impressed by IMC's simple and profitable business model. With this acquisition, we have the benefit of investing in a stable business with very significant growth prospects." <br><br>"As a member of the Berkshire family we'll have the benefit of a strong platform that's committed to continuing our historical success," said Eitan Wertheimer. "This transaction is not only significant for our company, our customers and our employees, but also for our industry, and for the State of Israel."<br> <br> <br> <p></p><i></i>