Oracle of Omaha puts faith in Galilee
OMAHA, NEBRASKA - In what is perceived to be a vote of confidence in the Israeli economy by one of the world's wealthiest entrepreneurs, billionaire investor Warren Buffett is acquiring 80 percent of Iscar Metalworking Companies, owned by the Wertheimer family, for $4 billion in cash. this is Buffett's first major acquisition outside the United States.
The deal, which reflects Iscar's worth at nearly $5 billion, propels Stef and Eitan Wertheimer to the top of the list of Israel's richest families. Privately held Iscar is the world's leading manufacturer of precision carbide metal working tools.
Buffett, whose estimated worth of $40 billion places him as the second richest man in the world behind Microsoft's Bill Gates, believes in Iscar management. All senior members are expected to remain at their jobs, including President Jacob Harpaz. Eitan Wertheimer, son of founder Stef Wertheimer and responsible for the company's blazing success, will remain as chair.
"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 statement. "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."
Eitan Wertheimer, and president and chief executive, Jacob Harpaz, said they were glad their company would be joining the Berkshire family. "This deal is not only important to our company, customers and workers but also to the entire sector and the State of Israel," he said.
Buffett, considered the most talented investor in the world, appeared yesterday on stage with Eitan Wertheimer before an estimated 25,000 attendees of Buffett's annual meeting in his hometown of Omaha, Nebraska. The American billionaire rarely makes public appearances, so many see this meeting as a golden opportunity to receive investing tips. All the hotels for this weekend, known as the "Woodstock of capitalism" have been booked for weeks.
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.
Nicknamed "the Oracle of Omaha," he has for years stuck with his prediction that the dollar would weaken. Another brilliant call of his was silver. 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.
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.
Berkshire owns a diverse mix of more than 60 companies, including H&R Block, Anheuser-Busch, Coca-Cola and retail chain Wal-Mart. Berkshire is sitting on a $45 billion mountain of cash, many on Wall Street believed the company would announce a major acquisition at the meeting.
Buffett is known for prefering to invest in companies that are easy to understand but have growth potential, avoiding technology firms. Iscar's business dealings, in contrast, are much less known.